Doomstead Diner Menu => Economics => Topic started by: RE on August 27, 2012, 02:14:08 AM

Title: Official Chinese Toast Thread
Post by: RE on August 27, 2012, 02:14:08 AM
I've been calling this one for YEARS.  About time.  The Chinese are....

(http://2.fimagenes.com/i/2/5/ff/am_86399_3125663_106334.jpg)

RE

China Stocks Drop To Fresh Post-2009 Lows Following Plunge In Industrial Company Profits (http://www.zerohedge.com/news/china-stocks-drop-fresh-post-2009-lows-following-plunge-industrial-company-profits)
Submitted by Tyler Durden on 08/27/2012 04:33 -0400

Bank of AmericaBank of AmericaCarbon EmissionsChinaDeutsche BankEurozoneHong KongJim ReidMonetary PolicyRealityWen JiabaoYuan

Today the Chinese stock market did something unthinkable: it plunged to fresh post 2009 lows on news so bad they would have been enough to send the stock markets of such "developed" bizarro economies as the US and Europe limit up. The catalyst, as Bloomberg reports, was that Chinese industrial companies’ profits fell in July by the most this year, a government report showed today, adding to evidence the nation’s economic slowdown is deepening. Income dropped 5.4 percent last month from a year earlier to 366.8 billion yuan ($57.7 billion), the fourth straight decline, National Bureau of Statistics data today showed. That compares with a 1.7 percent slide in June and a 5.3 percent drop in May. What is disturbing is that the slide persisted even as revenue in the first seven months increased 10.6 percent to 50 trillion yuan, today’s report showed. Which means that cost and wage pressures are starting to truly bite Chinese corporations, that the US ability to export inflation to China is much more limited, and that one can forget the PBOC easing monetary conditions any time soon for many of the reasons discussed in the past week. It also means that China is now stuck hoping that Wen Jiabao will at least implement some fiscal stimulus. The reality however, judging by the SHCOMP's reaction, is that the benefit from fiscal programs in China, and everywhere else, is far more limited than monetary policy intervention. End result: SHCOMP down 1.74%,to 2,055, a three year low.

From Bloomberg:

Today’s data add pressure on the government to step up policy easing to reverse a slowdown that may extend into a seventh quarter. On an inspection of Guangdong province from Aug. 24 to 25, Premier Wen Jiabao said difficulties in stabilizing the expansion are “still relatively large” and called for measures to promote export growth to help meet the country’s annual economic targets, the Xinhua News Agency reported.

“The economy is slowing faster than what had previously been expected,” said Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong. The profit outlook is for “further weakness throughout the year,” he said.

Industrial companies’ profits in the first seven months of the year declined 2.7 percent to 2.7 trillion yuan, according to today’s statement. That compares with a 2.2 percent drop in the first half and a 28.3 percent gain in the same period in 2011.

Bank of America and Deutsche Bank AG this month reduced their forecasts for full-year economic expansion to 7.7 percent, which would be the slowest pace since 1999. Wen in March set a target of 7.5 percent.

Company profits are declining amid falling prices, higher costs and slower demand.

Xinjiang Goldwind Science & Technology Co. (2208), China’s second- biggest maker of wind turbines, said last week that first-half profit slumped 83 percent as competition intensified and market growth slowed.

Deutsche Bank's Jim Reid had this to add:

Asian equities are weaker despite the positive US lead on Friday. The Hang Seng and the Shanghai Composite are down 0.15% and 1.32% as we type as China‘s latest industrial profits dropped 5.4%yoy in July (-2.4% year-to-date). Chinese Premier Wen was quoted by state media over the weekend as saying that “negative factors…will affect stable economic operations in the second half” and the difficulties of estabilising growth are “relatively large”. Adding to the negative sentiment, BHP Billiton CEO commented that he expects ''long-term'' price declines for the miner's commodities as slower economic expansion in China weighs on demand. Iron ore prices continue to fall with the spot benchmark down for its 8th consecutive day on Friday.

We showed the iron ore collapse previously here.

Finally, the Telegraph adds some more color on what is now China's last recourse, namely more fiscal stimulus, since courtesy of the risk of soaring Soybean prices first predicted here over a month ago, and since confirmed, the PBOC's hands are tied:

 The Telegraph has travelled to the south of China over recent days to witness a slowdown in the coastal economy and in the export sector, and also to areas which are flourishing with new investment, and where the local economy is booming. The picture appears mixed. China, geographically almost the same size as the Eurozone, appears to be struggling in some areas and flourishing in others. A new inland corridor, running from Liaoning in the north to Guizhou in the south, through cities such as Wuhan and Changsha, is booming.

In response, Guangdong has unveiled 177 "core projects" worth 1 trillion yuan, joining a long list of local governments to announce "stimulus" plans. The huge cities of Chongqing and Tianjin, meanwhile, both said they would spend 1.5 trillion yuan, while Guizhou, one of China's poorest provinces, has said it will spend 3 trillion yuan on eco-tourism and creating a series of national parks.

The central government, meanwhile, said it would spend to plough 2.4 trillion yuan into reducing carbon emissions and energy conservation programmes over the next three years, and has already set aside 26bn yuan in subsidies to encourage consumers to switch to low-energy appliances.

The role call of announcements may be a signal that after half a year of fine-tuning monetary policy, the government is preparing to take more drastic measures.

While the Communist party had pencilled in slower growth of 7.5pc for this year, in order to restructure and rebalance the economy, there are indications that China may suffer, or may already have suffered, a "hard landing", where growth would fall to below 7pc.

"A hard landing in China would look like the fourth quarter of 2008 and the first quarter of 2009 when exports collapsed, factories had no orders and migrant workers were laid off by the tens of millions," says Wang Tao, an economist at UBS.

Mr Wen said many "negative factors" would continue "to affect stable economic operations in the second half" and that the difficulties of boosting growth are "still relatively large".

"Facing the current difficulties, we have to improve the operating environment for companies and enhance the corporate confidence," he said.

At this point all we can add is that we are jealous and envious of China, where men are men, women are women, bad news are no longer not good news, and things are finally starting to make sense. As reported earlier, expect US stocks to soar on the realization that for China a hard landing now looks inevitable.
Title: Re: Official Chinese Toast Thread: China Announces £800bn Stimulus
Post by: g on August 27, 2012, 03:17:20 AM
 
China announces £800bn stimulus to boost confidence
China has announced a total of 8 trillion yuan (£800bn) of "stimulus projects" to try to boost confidence in an economy that appears to be cooling faster than expected.


China's export sector is suffering from anaemic demand from Europe and the United States. In the first seven months, exports rose 7.8pc, while imports rose 6.4pc, leaving China in danger of missing its 10pc target for trade growth this year. Photo: Reuters
Malcolm Moore

By Malcolm Moore, in Beijing

7:00PM BST 26 Aug 2012

Comments114 Comments

One Chinese province after another has stepped forward over the last fortnight to announce their plans, in what appears to be a propaganda effort to reassure the public that the economy is still on track.

Meanwhile, Wen Jiabao, the Chinese premier, promised over the weekend that the Chinese government would intensify its efforts to boost the economy in the second half of the year.

On a visit to Guangdong, the heartland of China's export industry, Mr Wen warned that "there will still be a lot of problems and uncertainties in      :icon_study:              www.telegraph.co.uk/finance/china-business/9500548/China-announces-800bn-stimulus-to-boost-confidence.html (http://www.telegraph.co.uk/finance/china-business/9500548/China-announces-800bn-stimulus-to-boost-confidence.html)
Title: Re: Official Chinese Toast Thread
Post by: JoeP on August 28, 2012, 03:10:27 PM
GO,

Thanks for link to the Telegraph article.  £800bn is not chump change.  I hope they use some of this money to fix some bridges (http://www.doomsteaddiner.net/forum/index.php?topic=673.msg7093#msg7093).

From the Telegraph article:

"Many of the new stimulus projects appear to simply be restatements of existing commitments, and there was no indication of how they will be funded."

So I guess we'll find out if this is BS or the real deal when/if it happens....and isn't (at least partially) a "restatement of existing commitments".

I think they probably will "really" do it because the newz coming out of China is getting pretty crappy lately.  Like stories of non-performing loans (http://www.zerohedge.com/news/chinas-non-performing-loan-nightmare) and  mounting piles of unsold goods (http://www.nytimes.com/2012/08/24/business/global/chinas-economy-besieged-by-buildup-of-unsold-goods.html?pagewanted=all).

(http://graphics8.nytimes.com/images/2012/08/24/business/global/24inventory/24inventory-articleLarge.jpg)
Bags of toys stored at a shop in a wholesale market in Guangzhou, a city in southeast China
Title: Re: Official Chinese Toast Thread
Post by: JoeP on August 28, 2012, 05:58:56 PM
...and it's not just bridges that are broken..."Broken Dreams" (emphasis added):

China: Broken Dreams

Despite the country's rapid economic growth, many young Chinese are growing disillusioned as they struggle to find jobs.

101 East Last Modified: 24 Aug 2012 17:39

http://www.youtube.com/v/aoP730EnFqM?feature=player_detailpage

Many young Chinese are losing faith in China's economic miracle.

Although the nation's economy has expanded to more than $7 trillion and is poised to overtake the US in the next decade as the world's largest, fewer Chinese feel they are sharing in the prosperity.

A sense of disillusionment is spreading, particularly among the post-1980 generation, who are well-educated and mobile but still struggle to find profitable jobs.

Signs that the economy is slowing only add to the malaise. The Chinese government predicts the economy will grow by 7.5 per cent in 2012, down from 9.2 per cent last year, which would be the slowest growth rate since 1990. Economists say this could mean the loss of two million jobs.

At the same time a record number of new graduates are looking for work. Some 25 million Chinese will be on the job hunt this year. Even those who find work are frequently disappointed.

Surveys show that young Chinese office workers in big cities are widely unhappy. Most complain of a feeling of insecurity.

After two decades of economic reform, per capita GDP has risen 13-fold, and average salaries in major cities are on par with those in many developed countries. The post-80s generation, the first to come of age in this era of opportunity, has been raised on a belief that if one can do well in school, graduate from a good university and work hard on his or her career, one can enjoy a measure of success.

Instead, many find themselves squeezed by skyrocketing housing costs, rising prices for basic necessities and family pressures. As a large percentage of the post-80s generation are only children, they alone will be expected to provide for their parents and older relatives.

As many as three million young Chinese professionals toil in slum-like conditions in cramped housing on the outskirts of big cities. They are known as 'ant tribes,' a term coined by scholar Lian Si, China's foremost researcher on post-80s graduates.

"They share every similarity with ants," writes Lian. "They live in colonies in cramped areas. They're intelligent and hardworking, yet anonymous and underpaid."

Li Zhirui from China's northeast is one of them. Home is an eight square metre space outside Beijing that costs 500 Chinese yuan per month, a quarter of his salary. He dreams of one day buying an apartment, but with average real estate prices in the capital soaring to more than 20,000 yuan per square metre, he could be in for a very long wait.

He has already lost his fiancée, who dumped him when he refused to buy a second-hand car and an engagement ring.

The experiences of Li and other 'ant tribes' resonate strongly with young Chinese and have spawned a popular song and a TV series called Struggle of the Ant Tribe.

But for some despair takes over. Suicide has become the biggest cause of death for Chinese between 15 and 34 years of age.In a recent trend, some young graduates are deciding to flee the big cities and instead seek opportunity in smaller cities and towns. But there, too, they are frustrated, as they discover that good diplomas - and even ability - do not open doors. Local networks and family background do.

Leading Chinese sociologist Guo Yuhua calls this phenomenon of young Chinese "escaping and returning" an example of widespread disappointment that is spreading across China. She says people are bitter when they see their social status languishing in contrast to the "rise of a great and powerful nation".

"People are discovering that society's resources and opportunities are increasingly concentrated in the hands of a few. People in the middle and lower strata of society are becoming increasingly marginalised and are finding that improving their lives is getting harder," she says.

She warns this imbalance could lead to "the rich getting richer and the poor poorer, the strong permanently strong and the weak permanently weak .... The biggest harm may not be in the gap between rich and poor itself, but the deterioration of the overall societal ecosystem."

http://www.aljazeera.com/programmes/101east/2012/08/201282294320474807.html">China
Title: Re: Official Chinese Toast Thread
Post by: g on August 28, 2012, 06:14:45 PM
Quote JoeP "GO,

Thanks for link to the Telegraph article.  £800bn is not chump change.  I hope they use some of this money to fix some bridges."

Hi JoeP,  Have come to the point with this entire China conundrum that my brain just goes "Tilt"

1.3 Billion people in a country the size of Texas, putting more cars on the road than the US every year, with air, food, and water pollution rampant, suffering a severe economic contraction and real estate bust at the same time are just too much for my brain to handle.        :icon_scratch:

I just stare at the whole situation with my mouth wide open in bewilderment wondering what's next.   Have an instinctive feeling however, that it won't be pretty!               :icon_study:
Title: Re: Official Chinese Toast Thread
Post by: Ka on August 28, 2012, 10:41:58 PM

1.3 Billion people in a country the size of Texas, putting more cars on the road than the US every year, with air, food, and water pollution rampant, suffering a severe economic contraction and real estate bust at the same time are just too much for my brain to handle. 

For the sake of your brain, China is over 13 times bigger than Texas. It's about the same size as the US, including Alaska.
Title: Re: Official Chinese Toast Thread
Post by: g on August 29, 2012, 03:07:55 AM
Quote KA "It's about the same size as the US, including Alaska."

Sorry KA, Was thinking about something I had read about the majority living in an area about that size.  :icon_scratch: 
Title: Chinese Toast: Asia's Manufacturing Slump Deepens
Post by: RE on September 02, 2012, 08:36:23 PM
No worries though, the Chinese are buying GOLD!

RE

Asia's Manufacturing Slump Deepens  (http://online.wsj.com/article/SB10000872396390444301704577628262353273228.html)

By ARRAN SCOTT

SINGAPORE—Asia's manufacturing downturn deepened in August as China showed notable weakness, adding to pressure on governments and central banks to do more to prevent a sharper slowdown caused by flagging demand from Western markets.

Manufacturing in South Korea continued to shrink in August, as the HSBC Purchasing Managers' Index ticked up to 47.5 from 47.2 in July. The figure remained below the level of 50.0 that separates expansion and contraction for a third straight month.

The Korean PMI report followed Saturday's news of further deterioration in China's manufacturing sector, a worrisome sign for other Asian economies whose exporters are attuned to Chinese economic conditions. China's official manufacturing PMI fell for a fourth straight month in August and signaled a contraction for the first time since November, according to the China Federation of Logistics and Purchasing. The PMI fell to 49.2 from 50.1 in July, below a forecast of 50.0 in a poll of 11 economists.

Weakness in China's industrial sector poses particular challenges for Australia, which has invested heavily in its natural-resource sector to feed Chinese demand. Prices of iron ore and other industrial commodities have fallen in recent months in tune with softer demand from China, squeezing profit margins and calling into question the viability of some future mining projects.

The Australian Industry Group-PricewaterhouseCoopers Australian Performance of Manufacturing Index increased 5.0 points in August from July to 45.3, still signaling contraction. Basic metals and transport equipment were among the weakest performers as higher utility costs, the strong Australian dollar and soft retail demand continued to damp activity.
 
"Manufacturing conditions continue to be very challenging across the sector with the high (Australian) dollar and weakness in demand in the domestic and export markets weighing on growth," said Innes Willox, chief executive of Australian Industry Group.

The outlook for Asia's exports doesn't look good. Recent data suggest the euro zone is sliding into recession. The U.S. recovery also remains patchy, with Federal Reserve Chairman Ben Bernanke bolstering expectations Friday the Fed may pump more money into the economy to spur growth.

South Korea's exports—a bellwether of Asia's export trends—dropped 6.2% in August from a year earlier, with shipments to nearly all major global markets falling. In the first 20 days of August, exports to China fell 5.6%, while those to the European Union plunged 9.3%. Exports to the U.S. were down 2.1%, according to government data.

Economists said the Chinese manufacturing slump boosts the chance Beijing will turn up monetary and fiscal stimulus to support the economy. In Korea, where data showed inflation slowed to the slowest pace in more than 12 years, the central bank also has room to cut rates.

"Korea's manufacturing sector remains weak, even if conditions aren't deteriorating as sharply as before. Demand from home and abroad continues to contract, prompting local firms to reduce output further," HSBC economist Ronald Man said in a report. "With the Chinese economy yet to show signs of a meaningful recovery, policy makers in Korea need to support domestic demand as trade levels remain suppressed."

Mr. Man said he expects the Bank of Korea to deliver one more quarter-percentage-point rate cut this month after a similar cut in July.

Korea's Consumer Price Index rose 1.2% on year in August, the slowest pace since May 2000, Statistics Korea said. The August reading was also slower than a 1.5% rise in July and a 1.35% increase forecast for August by a Dow Jones Newswires poll.
—In-Soo Nam and Kwanwoo Jun in Seoul, Enda Curran in Sydney, and William Kazer and Rose Yu in Beijing contributed to this article.

Write to Arran Scott at arran.scott@dowjones.com
Title: Re: Official Chinese Toast Thread
Post by: g on September 02, 2012, 09:33:09 PM
RE Quote "No worries though, the Chinese are buying GOLD!"

What's the point?  They were buying it during their boom also.   
Title: Chinese Toast: Tanking Production is BULLISH!
Post by: RE on September 02, 2012, 10:56:59 PM
OMFG.  The NEW Surreality!

The worse the data is, the better the markets do, because the "investors" figure Bad Data means more Free Money from the CBs!

No doubt, when La Garita Caldera goes Ballistic here and puts ANOTHER 5000 cu km of Ejecta up into the atmosphere, the Traders on the Hong Kong exchange will send it to new Highs for the year in anticipation of enough Funny Money being printed to squash the Super Volcano.

For those of you who don't keep track of these things, La Garita's Eruption at Fish Canyon Tuff was the BIGGEST one the Geologists have ever been able to find, bigger than Toba, bigger than the  Yellowstone eruptions.  2.3M Years ago, its probably Overdue also now to go Ballistic.

I sleep well knowing these Master Traders are at the Helm here, don't you?

RE

Asian stocks rise after poor China production data convinces traders that easing is on the way (http://www.washingtonpost.com/world/asia_pacific/asian-stocks-rise-after-poor-china-production-data-convinces-traders-that-easing-is-on-the-way/2012/09/02/3e31399c-f578-11e1-863c-fe85c95ce4ed_story.html)

By Associated Press,

BANGKOK — Asian stock markets rose Monday after a contraction in China’s manufacturing boosted expectations of more stimulus for the world’s second-biggest economy.

An industry group said on the weekend that China’s purchasing managers index, which reflects manufacturing activity, fell to 49.2 in August from July’s 50.1 on a 100-point scale. Numbers below 50 show a contraction. It was the group’s weakest reading to date.

That fueled doubts about whether China has started to recover from its deepest economic downturn since the 2008 global financial crisis. China’s economic growth fell to a three-year low of 7.6 percent in the second quarter. Corporate profits and other indicators have fallen despite government stimulus measures.

 “The numbers were really bad, and many people believe that the government will have to do something to increase liquidity,” said Francis Lun, managing director of Lyncean Holdings in Hong Kong.

Japan’s Nikkei 225 index fell 0.4 percent to 8,807.40. But after a lower opening, Hong Kong’s Hang Seng gained 0.4 percent to 19,549.82. South Korea’s Kospi also reversed course, gaining 0.5 percent to 1,913.38. Australia’s S&P/ASX 200 added 0.4 percent to 4,333.90.

Shares in mainland China and Taiwan also rose. The two countries signed an agreement Friday to allow Taiwanese banks to handle China’s yuan currency. Under the deal, signed by the two sides Friday, Taiwanese banks can take yuan deposits and convert yuan into the New Taiwan dollar, skipping the current process of first converting the yuan into U.S. dollars.

Benchmark crude for October delivery was down 22 cents to $96.26 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, crude rose $1.85 to end at $96.47 per barrel after Federal Reserve Chairman Ben Bernanke made clear in a speech that the central bank will do more to revive the U.S. economy.

In currencies, the euro rose to $1.2577 from $1.2560 late Friday in New York. The dollar fell to 78.25 yen from 78.31 yen.
Title: Re: Official Chinese Toast Thread
Post by: EndIsNigh on September 02, 2012, 11:10:50 PM
Surreality is right.  What the f man?  This market has no shame.  What will it take to bring it down to earth?  Investors must be in so deep they figure there's no way they can pull out now. 

Strange days.
Title: Re: Official Chinese Toast Thread
Post by: RE on September 02, 2012, 11:44:30 PM
Investors must be in so deep they figure there's no way they can pull out now. 

That is really a very perceptive observation.

The WHOLE financial "system" such as it is these days is based on the "Market".  The Capital the Banks have is in the "market", J6P Pension Fund is in the "market" etc.  If the Market Tanks, at this point everything is so connected to it that I think NOBODY KNOWS what they will do when it BLOWS.

For the TBTF, there is no "gentle" way to "ease" out of the market.  Anybody who starts selling now big time can cause a run, and nobody can sell fast enough to survive a run once it starts, not if they are Big Boys holding Billions in a variety of worthless Toilet Paper.

So they hang every day on the Hopium that their local CB will issue out still more Free Money and they keep Buying junk like Facepalm and PoopOn.

Something's gotta GIVE here.  The Emperor has no CLOTHES, and somebody will one of these days point out for all to see that he is NAKED.

RE
Title: Re: Official Chinese Toast Thread
Post by: EndIsNigh on September 02, 2012, 11:59:12 PM
If only someone would pay me to make perceptive observations I wouldn't be in the shit I am now.  My business has met with some problems and I'm starting to question the whole venture all over again.  I saw a job listing to do ATM upgrades for one of the big 4 banks that's been advertised locally which is tempting me to pull a WHD and join the dark side.  I'm just not hungry enough (BTW I agree with your sentiment along these lines in the OWS thread) yet to submit an application...

I suppose the beauty of the setup is that it provides someone who has the means to get out in a way that delivers the trigger that takes down the whole system to do exactly that.  Will it be a black swan, or an intentional short circuit that brings the house of cards falling down?
Title: Re: Official Chinese Toast Thread
Post by: RE on September 03, 2012, 12:01:43 AM
For the sake of your brain, China is over 13 times bigger than Texas. It's about the same size as the US, including Alaska.

The nice thing about Alaska is that there are fewer people living here than in a Beiing suburb.  :icon_sunny:  In fact, your typical Apartment Complex in Beijing has more people living in it than Alaska.  Hell, more people are probably on a Beijing subway train on any giving morning than live in Alaska!

The LAST GREAT FRONTIER! Gotta Love It.
(http://imgs.abduzeedo.com/files/articles/photos_alaska/idyllic-alaska-by-walt-k.jpg)

RE
Title: Re: Official Chinese Toast Thread
Post by: RE on September 03, 2012, 12:22:47 AM
I saw a job listing to do ATM upgrades for one of the big 4 banks that's been advertised locally which is tempting me to pull a WHD and join the dark side.

You can join WHD on the Dark Side as a means to survival...

(http://www.antiochofedgefield.com/wp-content/uploads/2010/06/the-dark-side.jpg)

or you can COME WITH ME IF YOU WANT TO LIVE!

http://www.youtube.com/v/qq2hWRHkk-M

Lock and Load.

RE
Title: Re: Official Chinese Toast Thread
Post by: JoeP on September 09, 2012, 08:06:42 AM
Sock City's decline may reveal an unravelling in China's economy

snip:

But Alistair Thornton of IHS Global Insight warns: "More of the indicators we are looking at are showing strain and weakness. It's nowhere near what we were looking at four years ago, but nonetheless pretty ugly.

"There are huge stockpiles of coal at Qinhuangdao; steel factories in Hebei are over capacity; in retail, auto dealers have two, three, four months' more stock than they are used to."

 
 
click here for complete article (http://www.guardian.co.uk/business/2012/sep/09/sock-city-decline-china-economy?newsfeed=true)
Title: Re: Official Chinese Toast Thread
Post by: JoeP on September 09, 2012, 08:09:09 AM
The river that DID run red: Residents of Chinese city left baffled after Yangtze turns scarlet
By Daily Mail Reporter
PUBLISHED: 08:38 EST, 7 September 2012 | UPDATED: 08:39 EST, 7 September 2012

It is the last thing the residents of Chongqing would have expected to see.

But the Yangtze river, which runs through the city in south-western China, turned a bright shade of orange-red yesterday.
The waterway where the Yangtze met the Jialin River provided a fascinating contrast as the red started to filter into the other river.

(http://i.dailymail.co.uk/i/pix/2012/09/07/article-0-14E29AD2000005DC-298_964x505.jpg)

click here to continue reading article and view more pictures (http://www.dailymail.co.uk/news/article-2199800/The-river-DID-run-red-Residents-Chinese-city-left-baffled-Yangtze-turns-scarlet.html#ixzz25z38VqiZ)
 
Title: Re: Official Chinese Toast Thread: An Opposing View of China: China's Next Act
Post by: g on September 12, 2012, 06:32:06 AM

China’s Next Act
By Frank Holmes
Created 11 Sep 2012
The ECB calmed the markets—will China act next?

After Mario Draghi announced the European Central Bank’s new bond buying program, I was the first guest on CNBC Asia’s Squawk Box to weigh in on this decision. I reiterated my stance that the endgame for Europe would be to print money, which will eventually lead to currency wars. These actions are positive for gold and also for increased economic activity.

See another conversation on ECB and gold with Squawk Box here. [1]

China too has kept investors on the edge of their seats, as we wait for some monetary or fiscal action. Everyday that goes by with no significant policy decisions from the Asian giant causes the market to lose confidence in its ability to steer its ship. Even the most optimistic bull can be vulnerable to a loss of confidence.

The sunset view from my room in Hong Kong

It often helps to gain a different perspective, which is what a business trip halfway around the world can provide.

I’ve been traveling in Singapore and Hong Kong and I continue to be amazed by the juxtaposition of the vibrancy of the Asian continent compared to investor sentiment in the States. It’s a subtle difference, but you can see it in the faces of people walking the cities, you can feel it when talking with local entrepreneurs and you can read it in a speech from local government leaders.

Singapore’s Prime Minister Lee Hsien Loong provided a beam of light to a Beijing audience only days ago. During his speech at the Central Party School, the prime minister discussed China’s significance in the world as it relates to political relations, government policies, and world trade. He also touched on his country’s role in facilitating a solid relationship between the Asian giant and the world’s largest economy.               :icon_study:

http://feedproxy.google.com/~r/fso/~3/GESlnCuDAX8/china-next-act (http://feedproxy.google.com/~r/fso/~3/GESlnCuDAX8/china-next-act)
Title: Re: Official Chinese Toast Thread
Post by: JoeP on September 17, 2012, 05:30:24 PM
Shadow Bankers Vanishing Leave China Victims Seeing Scams (http://www.bloomberg.com/news/2012-09-12/shadow-bankers-vanishing-leave-china-victims-seeing-scams.html)

snip:

The shadow bankers are now disappearing, committing suicide or reneging on agreements, leaving thousands of victims in their wake. In the first half of the year, more than 58,000 lawsuits involving disputes over 28.4 billion yuan in private lending were filed in Zhejiang province, where Wenzhou is located, up 27 percent from the same period in 2011 and the most in five years, according to the provincial supreme court. One-fifth of the cases were in Wenzhou, where authorities have set up a special court to handle the surge.

Private-lending victims nationwide filed more than 600,000 lawsuits valued at 110 billion yuan in 2011, an increase of 38 percent from the previous year. In the first half of 2012, the number of filings rose 25 percent to 376,000, according to People’s Court, a newspaper run by China’s Supreme Court.


How China's Rehypothecated "Ghost" Steel Just Vaporized, And What This Means For The World Economy (http://www.zerohedge.com/news/how-chinas-rehypothecated-ghost-steel-just-vaporized-and-what-means-world-economy)

snip:

Police have arrested an employee from Baoyang Warehouse in Shanghai and are investigating documentation for steel stocks that the employee issued to a trading firm, said an official with the surname Ou at Baoyang. Baoyang is owned by China Railway Materials Shanghai Company Limited.

The trade firm used the stocks more than once as collateral to obtain loans, said an executive at Shanghai Minlurin, another trading firm that had steel stocks in the warehouse. The receipts used were for steel worth around 380 million yuan ($59.96 million), the executive said.

Similar cases have prompted some trading houses to temporarily halt transactions related to warehouse receipts, disrupting China's steel business, traders said.


If the above makes readers queasy, it should: after all rehypothecation of questionable assets is precisely what serves as the backbone of that critical component of the shadow banking system: the repo market, where anything goes, and where those who want, can create money virtually out of thin air with impunity as long as nobody checks if the assets used for liability creation are actually in the system (and with JPM as the core private sector tri-party repo entity, secondary only to the Fed, one can see why this question has never actually arisen).

Title: Re: Official Chinese Toast Thread
Post by: RE on September 20, 2012, 03:51:09 AM
Soft Landing?  Hard Landing?  No...

CRASH LANDING!

(http://gifsoup.com/view4/3874024/wile-e-coyote-1-o.gif)

U.S. Stock-Index Futures Drop on China Manufacturing Data (http://www.bloomberg.com/news/2012-09-20/u-s-stock-index-futures-drop-on-china-manufacturing-data.html)

 By Alexis Xydias - Sep 20, 2012 2:58 AM PT

U.S. stock-index futures declined as data from China to Japan and the euro area increased concern a global economic slowdown is worsening.

Adobe (ADBE) Systems Inc. fell in after-hours trading as the software maker forecast profit that missed analysts’ estimates. Norfolk Southern Corp. dropped 5.4 percent in Europe as the rail carrier’s outlook trailed projections. Bed Bath & Beyond Inc. (BBBY) retreated 5.3 percent after reporting second-quarter profit below expectations. Nike (NKE) Inc. rose 1 percent after the sporting- goods maker announced an $8 billion buyback.

Standard & Poor’s 500 Index futures expiring in December lost 0.3 percent to 1,448.2 at 10:57 a.m. in London before reports on U.S. leading economic indicators and manufacturing. Contracts on the Dow Jones Industrial Average fell 40 points, or 0.3 percent, to 13,457.

“Poor economic data has superseded central-bank stimuli as the market’s near-term focus,” said Ioan Smith, a market strategist at Knight Equity Europe Ltd. in London. “The re- acceleration of a slowdown in Asia and Europe to new cycle lows will be a big worry for countries in the midst of sweeping austerity and a concern for investors betting the recent rally can last.”

U.S. stocks rose yesterday as the Bank of Japan increased its asset-purchase target and sales of existing American homes rose more than forecast. The S&P 500 has advanced 16 percent in 2012 as central banks around the world stepped up their effort to sustain growth.

Chinese Manufacturing

A Chinese manufacturing survey pointed to an 11th month of contraction in September and Japan’s exports fell in August, supporting the case for increased stimulus as Asia’s growth slows.

The preliminary manufacturing reading for a China purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics was 47.8, compared with a final level of 47.6 last month. A reading above 50 indicates expansion. Japan’s overseas shipments slid 5.8 percent on weakness in demand from Europe and China.

Euro-area services and manufacturing output also contracted in September. A composite index based on a survey of purchasing managers in both industries in the 17-nation euro area dropped to 45.9, a 39-month low, from 46.3 in August, Markit said today in an initial estimate.

The Markit Economics preliminary index of U.S. manufacturing probably fell to 51.5 in September from 51.9 last month, economist forecasts compiled by Bloomberg show, indicating slowing growth.

Leading Indicators

The Conference Board’s gauge of leading economic indicators might have fallen 0.1 percent in August, after gaining 0.4 percent in July, a separate survey showed. The Federal Reserve Bank of Philadelphia’s economic index will probably be minus 4.5 for September, showing contraction for a fifth straight month, according to a Bloomberg survey of economists. Both reports are due at 10 a.m. New York time.

Trading of futures linked to the benchmark for U.S. options prices has risen to a record as investors seek to protect gains in stocks that are approaching all-time highs.

More than 190,000 futures on the Chicago Board Options Exchange Volatility Index (VIX) changed hands on Sept. 13, the most since the contracts started in 2004, according to data compiled by Bloomberg. That brought the average daily volume to almost 152,000 last week, a record. The VIX fell 41 percent this year through yesterday, leaving the gauge near a five-year low.

Adobe, Norfolk

Adobe dropped 0.9 percent to $32.81 in late New York trading yesterday. The company’s forecast for fiscal fourth- quarter sales and profit lagged behind analyst estimates as it offered a lower-priced subscription version of its flagship Creative Suite software. Norfolk Southern (NSC) declined 5.4 percent to $68.77 in Germany. Third-quarter profit will miss analysts’ estimates as dwindling volumes at the second-biggest eastern U.S. railroad add to signs of a slowing domestic economy.

A drop in coal carloads and merchandise shipments will offset container-freight gains, paring revenue by about $120 million for the three months ending Sept. 30, the company said late yesterday. Fuel-surcharge receipts will decline by $80 million.

Norfolk Southern’s peers also retreated. Union Pacific Corp. (UNP), the biggest U.S. railroad, fell 3.5 percent to $120.68 in Germany, while CSX Corp. (CSX) dropped 4 percent to $21.87.

Bed Bath

Bed Bath & Beyond, the operator of more than 1,000 home- furnishing stores, sank 5.3 percent to $65.16.

Net income fell 2.2 percent to $224.3 million from $229.4 million a year earlier, the Union, New Jersey-based company said late yesterday. Profit per share rose to 98 cents from 93 cents a year earlier after the number of shares outstanding declined. Analysts projected $1.02 a share, the average of 25 estimates compiled by Bloomberg.

Nike advanced 1 percent to $98.61 in Germany. The world’s largest maker of sporting goods announced an $8 billion, four- year program to repurchase Class B shares.

Liberty Global Inc. (LBTYA) may be active. The John Malone-led cable-TV company offered to buy the remaining 49.6 percent of Belgium’s Telenet Group Holding NV for 1.96 billion euros ($2.54 billion), allowing it to forge closer links with his other cable-TV units in Europe. The shares didn’t trade in Europe.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
Title: Re: Official Chinese Toast Thread
Post by: JoeP on September 20, 2012, 06:16:09 AM
489B Yuan is about 80B USD...not chump change.

China's Delinquent Loans Rise 333% Since End 2011
Submitted by Tyler Durden on
09/19/2012 23:26 -0400


Presented with little comment since our jaws just hit our chest - these stunning headlines from a PWC report:

•*CHINA TOP 10 LISTED BANKS' OVERDUE LOANS REACH 489B YUAN END-1H
•*CHINA OVERDUE LOANS RISE FROM 112.9B YUAN END-2011: PWC
•*INCREASE IN CHINA OVERDUE LOANS SHOWS NPLS MAY RISE, PWC SAYS
•*PWC CITES BANKS' REPORTS FOR OVERDUE LOAN DATA


Oops:

(http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/09/20120919_china3.png)

This?

http://www.youtube.com/v/m6TrHuvlf8o?feature=player_embedded

http://www.zerohedge.com/news/chinas-delinquent-loans-rise-333-end-2011
Title: China is a Roach Motel
Post by: JoeP on September 23, 2012, 05:12:01 PM
From the best short seller in the history of the universe:

China's a 'Roach Motel'; Don't Trust the Numbers: Chanos
Published: Thursday, 20 Sep 2012 | 8:02 AM ET
By: Jeff Cox


China's economy continues to deteriorate despite the government's efforts to paper over the troubles, making the country's stocks ripe for short-selling, hedge fund titan Jim Chanos told CNBC.

The head of Kynikos Associates may have been the market's most notorious China bear over the past few years, and he said his position has not changed.

In fact, he warned that investors should not trust the data coming out of the government as well as corporations in the world's second-largest economy, charging that he "would take issue with almost any corporate accounting in China."

"It's destined to suck Western capital into the country and have it never go out," Chanos said during a "Squawk Box" interview. "You're almost in a classic emerging market roach motel, except it's a really big one in that it's very difficult to earn adequate returns for capital and get your capital back as a Western investor."

On its face, China's gross domestic product growth is far from a recession level though the rate of growth has slowed.

The country's $7.6 trillion economy grew at a 7.6 percent rate in the second quarter, which would be good for most countries but relatively weak for China. Citigroup economists said Wednesday that the same pace likely will continue through 2013.

But Chanos charges that the underlying drivers in the economy are much weaker.

The most recent trade numbers, for instance, show that the August trade surplus swelled to $26.7 billion as imports dropped, reflecting a demand slowdown internally.

"China's growth is slowing pretty quickly. That's stated GDP — you're never going to see negative GDP from China year-over-year, I don't think, not under this regime," he said. "But look at corporate profits, look what's happening on the ground. Corporate profits are imploding over there."

Chanos said his "roach motel" remark was directed specifically at the country's "H shares" market — companies based in the mainland but whose shares also trade on the Hong Kong exchange.

"Take a look at the Chinese stock market. It's gone nowhere despite having one of the highest rates of growth of any emerging market, any market," he said. "GDP growth has been 9, 10 percent for 10 years and you've made no money in the Chinese stock market."

http://www.cnbc.com/id/49099734
Title: Progress in environmental regulation - China rolls out new Clean Water Act
Post by: JoeP on September 30, 2012, 08:41:25 AM
China's Great Wall Of Suds: Chemical Spill Results In 50 Foot Foam Tsunami

Submitted by Tyler Durden on 09/30/2012 10:29 -0400

This is just the second time in three days that China's province of Guangdong is being discussed on Zero Hedge. On Thursday we wrote that the mega city of Dongguang, once Guangdong richest, is now on the verge of bankruptcy as China's hard landing begins to take its toll. Today, we learn that instead of the rivers running red once all hell breaks loose in China, the color will be soapy white. Specifically, following a chemical spill in Xintang, in the provine of Guandong, the result was a 50 foot tsunami of foam which was swept down a river by heavy rainfall, causing widespread panic and evacuations. It also caused the following brilliant explanation from a Chinese spokesman: "People are right to be cautious but it is harmless. It made very large bubbles when it went over a waterfall, but apart from one or two dead fish, it is harmless." We can't wait to hear Chinese justifications of mushroom clouds: "aside from one or two billion dead people, they give you a healthy green afterglow"?

More:

This wall of foam sparked widespread panic among locals as it rushed along a river in southern China.

The mass of soapy suds blanketed the water in Xintang, in China's Guangdong province, leading to evacuations along the banks of the river.

But officials have now said the only threat posed by the foam - thought to have been caused by chemicals washed into the river - was the possibility of 'one or two dead fish' lurking in the bubbles.

The bizarre scene is thought to have been caused after heavy rainfall washed a non-toxic chemical deodorant from a household rubbish tip into the river.

The bubbles were created when the chemical was swept over a waterfall, officials said.

A spokesman said: 'People are right to be cautious but it is harmless. It made very large bubbles when it went over a waterfall, but apart from one or two dead fish, it is harmless.'


This is how China's great wall of soap suds looks like:


River of bubbles: The mass of foam sparked panic along the banks of the river in Xintang


Wall of foam: The suds are thought to have been caused by a chemical spillage in Xintang in China's Guangdong provinced by the mass of suds floating down a river in southern China

http://www.zerohedge.com/news/2012-09-30/chinas-great-wall-suds-chemical-spill-results-50-foot-foam-tsunami
Title: Re: Official Chinese Toast Thread
Post by: WHD on September 30, 2012, 09:36:55 AM
Quote
And ye shall hear of wars and rumours of wars: see that ye not be troubled: for all these things must come to pass, but the end is not yet.

For nation shall rise against nation, and kingdom against kingdom: and there shall be famines, and pestilences, and earthquakes, in divers places.

All these are the beginning of sorrows.

Right after rivers flow wild with walls of chemical bubbles.
Title: Re: Official Chinese Toast Thread
Post by: RE on January 09, 2013, 12:36:29 AM
(http://gifsoup.com/view4/3874024/wile-e-coyote-1-o.gif)
The Pundits are discussing the ramifications of a Chinese "Hard Landing".

How come they aren't discussing a Chinese CRASH Landing?

RE

A Hard Landing In China Part 1 - Evolution And Response (http://www.zerohedge.com/news/2013-01-08/hard-landing-china-part-1-evolution-and-response)

(http://www.zerohedge.com/sites/default/files/pictures/picture-5.jpg) (http://www.zerohedge.com/users/tyler-durden)
Submitted by Tyler Durden (http://www.zerohedge.com/users/tyler-durden) on 01/08/2013 18:30 -0500


Via Wei Yao of Societe Generale, Imagine a hard landing in China...
The Chinese economy has been enjoying a cyclical rebound since the beginning of Q4 2012. SocGen's central scenario is that this recovery will last until early Q2 2013 and then gradually lose momentum. In the medium term, they still anticipate a bumpy path of secular deceleration, leading to an average growth rate of 6-7% over the next five to seven years, down from 10% per annum over the last three decades.
This piece focuses on what is probably the most popular “what-if” question about the Chinese economy – what if China hard lands? We define a hard landing in 2013 as one where the official, full-year, real GDP growth rate plummets to below 6%, which we see as the minimum level needed to keep the job market stable and avoid systemic financial risk. As China undergoes demographic ageing and growth of the working-age population slows, this minimum stable growth level will decline further. However, if progress in rebalancing and structural reform remains slow, the probability of a hard landing will rise over the medium term. In the tail risk scenario set out below, 2013 will see several quarters with just 3% growth and full year growth would stand at just 4.2% compared to our central scenario of 7.4%.
What are the most likely triggers?
Two types of events could trigger a hard landing in China. First, the experience of 2008 showed that the Chinese economy is vulnerable to trade shocks. The Lehman crisis made exports go into reverse, resulting in the loss of nearly 50 million migrant worker jobs in the two quarters after it took place. Second, a hard landing could be provoked by either insufficient public investment from Beijing or a sharp property market correction, which could also be partly induced by tight policies. Policymakers might choose to do so out of concerns over systemic risks posed by local governments’ unhealthy leverage or rising social discontent on high housing prices. The point is that they would not deliberately choose to force a fast correction, but as China’s imbalances are already at a precarious level, the room for error and the likelihood of nasty unintended consequences is not negligible.
However, China is unlikely to experience a currency crisis like the Asian Financial Crisis, as it has little external debt and a still largely controlled capital account. The domestic financial market also lacks the clout to trigger a sharp correction, even though the dynamics there could aggravate the situation once the downward trend is set in motion.
How would the crisis evolve?
Whatever the catalyst, the excess capacity in the manufacturing sector – estimated at 40% in 2011 by the IMF – would be exacerbated by a sharp growth slowdown. This would cut corporate margins sharply, making profits plunge, and triggering a downward spiral in domestic demand. Bankruptcies and unemployment would occur on a large scale, endangering financial and social stability. One factor that could accelerate the downward spiral is the high leverage of China’s corporate sector, which exceeded 120% of GDP at end-2011 and has kept rising throughout 2012. As the crisis progressed, non-performing loans would undoubtedly rise beyond the capacity of local governments to contain them, as their fiscal resources dwindled. Even in China’s (semi-) controlled system, banks could choose to freeze lending as a knee-jerk reaction, while the authorities rushed to draft a decisive response. The rapid development of the non-bank credit market in the last few years, especially shadow banking activities, has created a new vector through which a systemic liquidity crunch could take place. Capital outflow would likely ensue, stretching domestic liquidity conditions further.
(http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/12-2/20130108_china1.jpg) (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/12-2/20130108_china1.jpg)

How would the government respond?
China’s political institutions allow the government to respond promptly in a crisis. A hard landing would test the new leaders’ willingness and capability to transform China from a capex-driven economy to one fuelled by consumption demand. The easy but dangerous choice would be for Beijing to repeat the post-Lehman package of massive state-driven lending and investment facilitated by ultra-low interest rates and ample liquidity. However, such a solution would be less effective than in 2009 given the overhang in capacity, and would increase corporate leverage even further. A more judicious response would combine genuine tax cuts to lower the burden on the corporate sector, further liberalisation to give private enterprises new space to grow, more social spending to anchor consumption, and selective state investment to prepare China better for future challenges. We believe such policies could pave the way to more sustainable growth in the medium term. In the short term, however, the impact on growth would be gradual, likely putting the new leaders under immense political and social pressure. There would be many aspects of policy response and an unlimited number of combinations. We would like to elaborate more on two aspects that would have direct and clear implications for the financial market.
How bad could things get?
To put it bluntly, the situation could get as bad as one dares to imagine, since the history of economic crises is packed with nasty surprises. In terms of GDP components, fixed asset investment usually contracts outright in a crisis, while consumption growth merely decelerates. If the government chooses the second (more difficult) path discussed above, investment growth might grind to a halt in the year after the crisis first hit, which implies at least one quarterly contraction. Household consumption would probably hold up better thanks to the accommodative and targeted fiscal policies. Together with direct fiscal spending, total consumption could grow by 4-5% annually. Assuming that there is no other shock to external demand, imports would probably fall more sharply than exports, so net exports would contribute positively to growth. Putting this together suggests GDP growth of only 3% during the four quarters between Q2 2013 and Q1 2014.
(http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/12-2/20130108_china2.jpg) (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/12-2/20130108_china2.jpg)

What would happen afterwards?
The difference between our central scenario and this risk scenario is merely the pace at which China corrects its structural problem of a production economy out of proportion to the consumption economy. Under our central scenario, investment will decelerate gradually and consumption increase moderately faster to partially offset the drag. This will only be possible if the new leaders proceed steadily with necessary reforms to improve investment efficiency, liberalise vital sectors and grow consumption sustainably. On the other hand, an abrupt correction doesn’t have to mark the end of China’s growth story, like Japan in the 1990s. It is the top leaders’ choices during the difficult times ahead that will determine the fate of the Chinese economy. The key is not to waste a crisis.

A Hard Landing In China Part 2 - Rest Of The World Impact (http://www.zerohedge.com/news/2013-01-08/hard-landing-china-part-2-rest-world-impact)

(http://www.zerohedge.com/sites/default/files/pictures/picture-5.jpg) (http://www.zerohedge.com/users/tyler-durden)
Submitted by Tyler Durden (http://www.zerohedge.com/users/tyler-durden) on 01/08/2013 22:17 -0500

Via Wei Yao of Societe Generale, ...and what it means for the rest of the world

Following on from our earlier discussion of how a Chinese hard landing would evolve (http://www.zerohedge.com/news/2013-01-08/hard-landing-china-part-1-evolution-and-response), SocGen now examines how a Chinese hard landing would impact the global economy. They see the contagion in several ways: mechanically (since China is part of the global economy) and through trade, financial and market channels. Mechanically, a slump in Chinese GDP growth to just 3% would cut our global GDP growth forecast by 0.6pp. Add to that the channels of transmission to the global economy, and our expectation is that a Chinese hard landing would result in 1.5pp being slashed from global GDP growth in the first year.
How important is China as a source of global demand?
With imports equivalent to 30% of its GDP, China is a major source of global demand. Exports to China as a percentage of GDP are largest in Asia and amongst the commodity exporters, so these countries would be hardest hit. Drawing on different studies, mainly from the IMF and the OECD, we estimate that the impact of the trade channel from the type of hard landing in China described in the previous section would cut GDP growth by around 4.5pp in Taiwan, 2.5pp in South Korea and Malaysia, 1.2pp in Australia, 0.6pp in Japan, 0.3pp in the euro area and 0.2pp in the US. For the global economy ex-China, the trade channel effects would bring about a reduction of around 0.7pp to GDP growth.
(http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/12-2/20130108_china3.jpg) (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/12-2/20130108_china3.jpg)

The impact of a Chinese hard landing on the rest of the world could be aggravated by the fact that investment would be particularly hard hit. As noted in the previous section, we expect investment – which now makes up half of Chinese GDP – to fall more than consumption if China does suffer a hard landing. And investment has significantly higher import content than consumption, most notably through commodities and machine tools. This could have a particularly sharp impact on some smaller commodity producers. For example, exports of energy and metals to China make up over 40% of Mongolia’s GDP. In terms of capital good exports to China, Taiwan has the closest ties, depending for just under 15% of its GDP thereon; but this is already a much lower number than that of Mongolia and many of the other commodity exporters. Exporters of consumer goods are less exposed, as seen in the chart overleaf.
For all the talk of the importance of China to exporters such as Germany, the absolute numbers remain modest despite strong growth in recent years.
(http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/12-2/20130108_china4_0.jpg) (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/12-2/20130108_china4.jpg)

Would currency and trade wars result?
The decline in global trade that would come with a China hard landing naturally leads to the question of whether currency and trade wars would result. As outlined by Wei Yao in the previous section (http://www.zerohedge.com/news/2013-01-08/hard-landing-china-part-1-evolution-and-response), our scenario assumes Chinese policymakers would tread very carefully, being only too well aware of the dangers. In Washington, the appreciation of the dollar that would follow as investors (both new foreign investment and US repatriation from abroad) seek the safety of US shores would not be welcome. Moreover, the Chinese yuan would be far from the only currency depreciating against the US dollar; trade weighted, our China hard landing scenario assumes a 10% dollar appreciation in the first year and this despite additional QE from the Fed. It does not take any great stretch of the imagination to paint an even bleaker scenario in which a China hard landing triggers outright currency wars and protectionist measures on trade flows. This would further aggravate the negative impact of a China hard landing and extend the duration of the shock.
How important are financial links to China?
Of the total foreign claims of BIS-reporting banks as of June 2012, only $731bn – or just 2.4% of the total – are on China. The risk of China transmitting a hard landing to the rest of the world through the banking channel thus appears modest. Foreign corporations present in China would see the value of their investments decline, but more importantly, profits generated in China would slump, hitting several major multinational companies. The response would be cost cutting, and not just in China.
Does the starting point for the global economy matter?
Our what-if analysis of a China hard landing draws on a wide body of academic research that analyses various shocks and how these disseminate to the global economy. These analyses often implicitly assume the starting point of an economy in equilibrium and with a well stocked arsenal of policy ammunition. The current situation is very different, however, with large output gaps in many of the world’s major economies, ongoing headwinds from deleveraging and policy arsenals already depleted. Add a China hard landing to the mix, and we expect the result would be a far greater uncertainty shock than had the starting point been a world in overall good health. Uncertainty would cause corporations globally to hold back further on investment and hiring decisions (even those not directly exposed to China). And, feedback loops from financial channels would further amplify the uncertainty shock as risky asset prices collapse. At the global level, we estimate that the combined uncertainty shock in our China hard landing scenario could exceed 1% of global GDP.
(http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/12-2/20130108_china5.jpg) (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/12-2/20130108_china5.jpg)

Where could offsets come from?
The effects of a Chinese hard landing on growth could, however, be offset by some secondary effects. Lower commodity prices are perhaps the most important. As a rule of thumb, we assume that, all else being equal, a $10/b permanent drop in the oil price would boost global GDP by around 0.3pp. Our commodity strategists’ assumption that a Chinese hard landing would initially cut oil prices by 30% implying a first offset.
The greater hope for offset is policy. Central bankers are usually the first at the scene of any shock and a first response would likely be more QE from the Federal Reserve, Bank of Japan and Bank of England. However, several prominent central bankers have already noted that there is a limit to QE and that it comes with diminishing returns. The ECB would keep the promise of OMT (Outright Monetary Transactions under the conditionality of a European Stability Mechanism programme) on the table and continue to supply amply liquidity. Central bankers could also explore other possibilities. The BoE already has a funding for lending scheme, the BoJ buys ETFs and REITs, Danmarks Nationalbank has a negative deposit rate … none of these measures have to date proven a panacea, however. This would not prevent central banks from trying, but we remain doubtful it would work and also note that some measures would require changes to legislation (such as the Fed buying equities) and would thus not be a day one response option. Turning to fiscal policy, we believe most advanced economies have little room for manoeuvre, though the US and Germany are potential exceptions; but even here we would not look for aggressive steps measures.
By contrast, emerging economies have greater room for both fiscal and monetary policy stimulus. If China does experience a hard landing however, some of the foreign inflows attracted by the higher returns in these markets could reverse, adding to pressure on these economies (albeit with the silver lining of currency depreciation).
Overall, we see little scope for economic policy to significantly offset the negative effect of a Chinese hard landing on the global economy. Additional policy stimulus would mainly serve to limit negative tail risks.[/list]
Title: Re: Official Chinese Toast Thread
Post by: Stucky1 on January 09, 2013, 08:18:35 AM
Thoughts about China from Jared Diamond:

================================

China, Lurching Giant

China's leaders used to believe that humans can and should conquer Nature, that environmental damage was a problem affecting only capitalist societies, and that socialist societies were immune to it. Now, facing overwhelming signs of China's own severe environmental problems, they know better... In 1983 environmental protection was declared a basic national principle — in theory. Many environmental protection laws and policies that have been adopted on paper are not effectively implemented or enforced.

Sandstorms inflict damage of about $540 million per year, and losses of crops and forests due to acid rain amount to about $730 million per year. More serious are the $6 billion costs of the "green wall" of trees being built to shield Beijing against sand and dust, and the $7 billion per year of losses created by pest species. We enter the zone of impressive numbers when we consider the onetime cost of the 1996 floods ($27 billion, but still cheaper than the 1998 floods), the annual direct losses due to desertification ($42 billion), and the annual losses due to water and air pollution ($54 billion). The combination of the latter two items alone costs China the equivalent of 14% of its GDP each year.

Average blood lead levels in Chinese city-dwellers are nearly double the levels considered elsewhere in the world to be dangerously high and to put at risk the mental development of children. About 300,000 deaths per year and $54 billion of health costs are attributed to air pollution.

Because of geographic factors, China's geographic core was unified already in 221 BC and has remained unified for most of the time since then, whereas geographically fragmented Europe has never been political unified. That unity enabled China's rulers to command changes over a larger area than any European ruler could ever command — both changes for the better, and changes for the worse, often in rapid alteration (hence "lurching").

The strengths and risks of China's unity have persisted into recent times, as China continues to lurch on major policies affecting its environment and its population. On the one hand, China's leaders have been able to solve problems on a scale scarcely possible for European and American leaders: for instance, by mandating a one-child policy to reduce population growth, and by ending logging nationally in 1998. On the other hand, China's leaders have also succeeded in creating messes on a scale scarcely possible for European and American leaders: for instance, by the chaotic transition of the Great Leap Forward, by dismantling the national educational system in the Cultural Revolution, and by the emerging environmental impacts of three megaprojects.

Q: China is a pursuing rapid expansion, as are India and other countries. What is the significance of this for us?

A: China is the world’s most populous country with the most rapidly growing major economy and rapidly increasing rate of per capita consumption. One way to appreciate the significance of China is to note the fact that the First World is currently operating unsustainably. Even if tomorrow morning everybody in China, Africa and South America were to die, and the only people left alive in the world were those in the First World, the fact would remain that the First World is operating unsustainably, running out of resources very quickly. But China is very much here, pursuing its goal of catching up to First World standards. At present, the Chinese consume things like water, metal and electricity at much lower per capita rates. However, if this country of 1.4 billion people catches up, the world will run out of resources even faster. At present, the First World will run out of resources in about 50 years, but it would be only five years if China, India, Africa and South America were all to catch up. It won’t work, incidentally, for Americans to tell these countries that their ambitions are going to cause problems and that they should lower their aspirations. Because their aspirations are our aspirations — which are now our accomplishments.
Title: Re: Official Chinese Toast Thread
Post by: Petty Tyrant on January 09, 2013, 05:31:31 PM
Im not sure why they put consumption of metal in the same sentence as consumption of water. Iron ore is 5% of earths crust, never going to run out, aluminium, copper, lead, even steel theres plenty of scrap still to be recycled as well. Clean water is already critical. Anyway consumption in the 3rd world is catching up fast and theres no way their environments can stand up to their populations all having cars and aircon.
Title: Re: Official Chinese Toast Thread
Post by: alan on January 24, 2013, 04:31:25 PM
Via Wei Yao of Societe Generale, Imagine a hard landing in China...
The Chinese economy has been enjoying a cyclical rebound since the beginning of Q4 2012. SocGen's central scenario is that this recovery will last until early Q2 2013 and then gradually lose momentum. In the medium term, they still anticipate a bumpy path of secular deceleration, leading to an average growth rate of 6-7% over the next five to seven years, down from 10% per annum over the last three decades.

Oh my GOD!  You mean they could slow from a FANTASTICALLY fast rate of growth
down to only a VERY fast rate of growth?!?  This is a disaster!  This presages the
irreversible collapse of not only China, but of global industrial civilization!
Title: Re: Official Chinese Toast Thread
Post by: RE on January 24, 2013, 04:57:31 PM
Oh my GOD!  You mean they could slow from a FANTASTICALLY fast rate of growth
down to only a VERY fast rate of growth?!?  This is a disaster!  This presages the
irreversible collapse of not only China, but of global industrial civilization!

For Banksters this represents a "Hard Landing", because  all their investments are based on the Chinese continuing to grow their economy at outrageous rates.

This isn't the kind of Hard Landing I expect though.  I expect them to go from a FANTASTICALLY fast rate of Population Growth to a FANTASTICALLY rapid DEATH RATE.

(http://www.jayhanson.us/Crash2.GIF)

Alan, are you related to Socrates?  LOL.

Maybe I should open a new board for Cornies?

RE
Title: Re: Official Chinese Toast Thread
Post by: RE on January 29, 2013, 02:35:55 AM
Guest Post: Soaring Debt Precedes Financial Crises...

(http://www.zerohedge.com/sites/default/files/pictures/picture-5.jpg) (http://www.zerohedge.com/users/tyler-durden)
Submitted by Tyler Durden (http://www.zerohedge.com/users/tyler-durden) on 01/28/2013 19:46 -0500
Title: Re: Official Chinese Toast Thread
Post by: Petty Tyrant on January 29, 2013, 05:56:55 AM
In the immortal  words of Mking, He is right foir the wrong reasons, the US did not suddenly become a superpower after ww2, they had already taken on spain in the carribean, mexico and phillipines and won to take those spoils. The french and british they had already dispatched to cold canada. thats the 3 big players minus the portugese of global players in imperial colonisation that the US had already had victory over. That had all already happened b4 the 20th C.  Saying that they emerged as the superpower only after ww2 is incorrect history. In the 1850's they had begun forcing japan to modernise and weaponise only to  build up and pull down setting the recipe for many future dictators.

In both ww1 and ww2 if they had fought first from the start the wars would have been over way sooner, both times they came in late and effectively mopped up after the french had given up, just as with vietnam they came in after the french had given up. It was pure genius, they let the brits also exhaust themselves before entering ww2, and that is why the brits and french lost their empires after ww2. The great depression of the 1930's ended in with an armament economy but that was building up over 3 years and not deployed until 1942.

As for china this misses the fact that the chinese are banking on over 2 billion people moving from ag to industry in their own homeland and planning to be fed by farmland all over the rest of the world. A world war where they have the by far inferior navy  would cut off these food supplies as a sure bet. The simile with the US which fed itself during ww2  breaks down here. Also the fact that massive underground  bunkers are built in china to house thousands of their elite also shows a key difference between the US during ww2 and china in a possible ww3, that is the us was not vulnerable to any real attack on its own mainland wheras china definitely is now by missile. The simile is too simple.
Title: Re: China's Air Pollution Is Saving Lives
Post by: monsta666 on January 29, 2013, 03:58:32 PM
Some experts say make the claim that Chinese air pollution - all things considered - actually saves lives. Just goes to show whatever viewpoint you have there will be some expert who will support you...

JEFFERIES: China's Air Pollution Is Saving Lives

(http://static5.businessinsider.com/image/508bb54569bedd7756000052-640-320-600-300/china-pollution-1.jpg)

Jefferies analysts Laban Yu and Jack Lu argue in a note today that China's epic air pollution is actually saving lives.

Wait what?

Here's their case:

Yes, of course China's smog problems are very real — they lead the world in premature deaths caused by air pollution:

(http://static3.businessinsider.com/image/5107de6d69beddbe1800002e-589-366/c-9.png)

But this massive pollution is actually a sign of rising living standards, they write:

                         The difference is that industrialization – with its incumbent air pollution – eliminates poverty. Among the top twenty nations with air pollution induced premature deaths are the US, Japan, the UK, Germany and Italy –                          all wealthy developed nations.

As it turns out, more people die prematurely in India from problems caused by a lacked of advanced infrastructure like diarrhoea and poor ventilation or burning of coal and animal dung for heat (which they categorize as "indoor air pollution"):

(http://static4.businessinsider.com/image/5107df3a69bedde518000009-590-368/d-5.png)

But a better measure of China's standing on public health is illness, disability and early death (DALY), a metric created by the World Health Organization.

By that criteria, China is not even in the top 20 —

(http://static2.businessinsider.com/image/5107e049ecad049b68000006-581-387/b-11.png)

And only a few notches behind Brazil:

(http://static1.businessinsider.com/image/5107e063eab8ea3634000019-574-385/a-9.png)

Yu and Lu point out that China's air pollution is the fruit of industrialization, and that industrialization is a life saver.

                    The public health effects of air pollution cannot be viewed in isolation. Nobody believes air pollution is a great thing but nations continue to pollute because civilizations make hard choices. And air pollution is not even                          that hard a choice. Higher cancer rates in old age are the price that China, and many other nations, have chosen to pay for lower death rates from childhood diarrhoea.
Title: Official Chinese Toast Thread: China's BLACKEST Day
Post by: RE on January 30, 2013, 01:05:12 AM
Cough. Cough.

I see DEAD Chinese.

(http://gifsoup.com/view7/2625477/i-see-dead-people-o.gif)

RE

China's “Blackest Day” Is Still In The Future (http://www.zerohedge.com/contributed/2013-01-29/china-%E2%80%9Cblackest-day%E2%80%9D-still-future)
Submitted by testosteronepit on 01/29/2013 20:33 -0500

BelgiumChinaCRAPGermanyIraqNatural GasNuclear PowerThe Economist


Wolf Richter   www.testosteronepit.com (http://www.testosteronepit.com)   www.amazon.com/author/wolfrichter (http://www.amazon.com/author/wolfrichter)

China has tried over the years to come to grips with its pandemic pollution, yet in Beijing, through a combination of factors, it reached catastrophic levels in mid-January and set another record. Result of the white-hot pace of economic growth. And of coal consumption.

The “Blackest Day,” is how The Economist called January 12 when the Air Quality Index (AQI) reached 755. It was “Beyond index” on a scale where the worst level, “Hazardous,” ranges from 301-500 and carries this warning: “Everyone should avoid all physical activity outdoors; people with heart or lung disease, older adults, and children should remain indoors and keep activity levels low.”

On that day, airborne particulate matter smaller than 2.5 microns in diameter (PM 2.5) reached 886 micrograms per cubic meter, about 35 times the guideline set by the World Health Organization. These particulates contain “sulfate, nitrates, ammonia, sodium chloride, carbon, mineral dust, and water” that form a “complex mixture of solid and liquid particles of organic and inorganic substances.” They contribute to cardiovascular and respiratory diseases, and lung cancer. Mortality in polluted cities exceeds that “in relatively cleaner cities by 15–20%.” The WHO estimated in 2007 that 656,000 Chinese died of air pollution every year, and another 95,600 from water pollution. Surely, this hasn’t gotten any better since.

Among the culprits: coal consumption. It has been on an uninterrupted tear since 2000 as China built a phenomenal number of coal-fired power plants (users of steam coal) and as it expanded its steel and iron industries (users of metallurgical coal). Bubble projects, overcapacity, construction of ghost cities, motor vehicles that turn the exploding net of roads and highways into clogged parking lots.... The excesses are everywhere. And power generating capacity from 2005-2011 doubled, of which 80%—despite efforts to diversify—still comes from coal.

China consumed 1.5 billion tons of coal in 2000, or 28% of total world consumption. By 2011, according to a just released report by the US Energy Information Agency, coal consumption had jumped 153% to 3.8 billion tons, amounting to 47% of total coal consumption in the world. Demand had increased an average of 9% per year! If the China bubble doesn’t accidentally get pricked in the interim, the country will consume more coal in 2013 than the rest of the world combined.

In that “rest of the world,” however, coal consumption has had a hard time, increasing only 1% on average per year over the 12-year period. Fingers are pointing at the US, once the largest coal market, until China came along. Much of the coal-consuming iron and steel industries in the US have migrated across the Pacific, and coal as a fuel for power generation has been on a long structural decline [read... Natural Gas And The Brutal Dethroning of King Coal].

The numbers are epic. China has more power generating capacity than any other country. In addition to being by far the largest consumer of coal, China is also the largest producer and has the third-largest coal reserves. Despite these superlatives, it was only the fourth-largest consumer of natural gas in 2011, though consumption jumped 50% from 2009. Nuclear power, with 15 reactors on line as of mid-2012, provides only a tiny portion of total power generation, but 26 (!) reactors are under construction [here is my article about its sideshow: Blowing Up: The Transfer Of French Nuclear Technology To China]. And renewables? Minuscule. But growing in leaps and bounds, of course.

As these alternatives are desperately trying to gain critical mass, coal consumption will continue to grow—and the pollution record of January 12, as horrid as it was, will turn out to be just another line item on a long list of surpassed records. The “Blackest Day” is still in the future.

While we on the West Coast get to breathe the airborne crap that makes it across the Pacific, there are opportunities for the US in China’s coal-fired bubble economy: coal exports. In 2012, the US exported an estimated 125 million tons of coal. It broke the prior record set in 1981 and was more than double the level of 2009. However, coal production in the US still declined. It’s tough out there.

Despite the frenetic growth in coal consumption in China and certain other parts of Asia, the US exported much more coal to ... Europe! Coal has been very competitive in Europe where natural-gas prices are so high that land-locked producers in the US get water in their eyes when they think about it. In countries like Germany and Belgium that were once coal mining bastions, coal production (and consumption) has been in free-fall. So US producers were able to export 42 million tons to Europe. To Asia, they shipped only 23 million tons—but this too is on the upswing. Even, if in a few years, people in Beijing are trying to figure out how to breathe the air outside.

To supply its bubble economy with raw materials and fossil fuels, regardless of the consequences, China has embarked on an all-out resource grab, in every direction. Its tentacles spread far and wide. Oil is on top of the list. Hence the moves in Iraq, where turmoil has created opportunities. Read.... It Wasn’t Supposed To Be This Way: Chinese Oil Companies Apparent Victors in Post-Saddam Iraq.
Title: Re: Official Chinese Toast Thread
Post by: WHD on January 30, 2013, 10:22:17 AM
Quote
To supply its bubble economy with raw materials and fossil fuels, regardless of the consequences, China has embarked on an all-out resource grab, in every direction. Its tentacles spread far and wide. Oil is on top of the list. Hence the moves in Iraq, where turmoil has created opportunities. Read.... It Wasn’t Supposed To Be This Way: Chinese Oil Companies Apparent Victors in Post-Saddam Iraq.

Where are CHENEY?BUSH?RUMSFELD now?
Title: Re: Official Chinese Toast Thread
Post by: Surly1 on January 30, 2013, 10:31:31 AM
Where are CHENEY?BUSH?RUMSFELD now?

I cannot PROVE that God exists, but I can incontrovertibly prove that Satan exists. As Exhibit A, I offer Satan's Vicar on earth, Dick Cheney. From that stain of pure evil, I posit the existence of a countervailing force.

And if you ever needed any confirmation of the contempt with which the Enlightened Ones hold the rest of us, consider his appearance this week on Faux "News"product. As an expert on gun safety.
Title: New Chinese Final Solution: Kevorkian Old People
Post by: RE on February 07, 2013, 03:59:30 AM
Since the One Child Policy didn't work out too good, the Politburo has come up with a BETTER 5 year plan!

Quote
The ageing crisis is well-known. It is already six years since a Chinese demographer shocked Davos with a warning that his country might have to resort to mass suicide in the end, shoving pensioners onto the ice.

Thank God GO is not Chinese.

This off Ambrose keyboard in the MSM. OMFG.

RE

IMF sees 140m jobs shortage in ageing China as 'Lewis Point' hits China’s vast reserve of cheap workers in the hinterland is vanishing at a vertiginous pace.  (http://www.telegraph.co.uk/finance/comment/9845959/IMF-sees-140m-jobs-shortage-in-ageing-China-as-Lewis-Point-hits.html)

(http://i.telegraph.co.uk/multimedia/archive/02279/china_2279724b.jpg)


Beijing revealed last week that the country’s working age population has already begun to shrink, sooner than expected.

(http://i.telegraph.co.uk/multimedia/archive/01805/AmbroseEvans-Pritc_1805020j.jpg) (http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/)
By Ambrose Evans-Pritchard (http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/)

6:48PM GMT 03 Feb 2013
(http://www.telegraph.co.uk/template/ver1-0/i/share/comments.gif)427 Comments (http://www.telegraph.co.uk/finance/comment/9845959/IMF-sees-140m-jobs-shortage-in-ageing-China-as-Lewis-Point-hits.html#disqus_thread)


We can now discern more or less when the catch-up growth miracle will sputter out. Another seven years or so - enough to bouy global coal, crude, and copper prices for a while - but then it will all be over. China’s demographic dividend will be exhausted.

Beijing revealed last week that the country’s working age population has already begun to shrink, sooner than expected. It will soon go into “precipitous decline”, according to the International Monetary Fund.

Japan hit this inflexion point fourteen years ago, but by then it was already rich, with $3 trillion of net savings overseas. China has hit the wall a quarter century earlier in its development path.

The ageing crisis is well-known. It is already six years since a Chinese demographer shocked Davos with a warning that his country might have to resort to mass suicide in the end, shoving pensioners onto the ice.

Less known is the parallel - and linked - labour drain in the countryside. A new IMF paper - “Chronicle of a Decline Foretold: Has China Reached the Lewis Turning Point?” (http://www.imf.org/external/pubs/ft/wp/2013/wp1326.pdf) - says the reserve army of peasants looking for work peaked in 2010 at around 150 million. The numbers are now collapsing.

Related Articles

Schmidt: China 'most sophisticated' hacker (http://www.telegraph.co.uk/finance/9843886/China-the-worlds-most-sophisticated-hacker-says-Googles-Eric-Schmidt.html)
02 Feb 2013
 
China manufacturing expands in Janaury (http://www.telegraph.co.uk/finance/china-business/9841375/China-manufacturing-expands-in-Janaury.html)
01 Feb 2013
 
Britain is driving Chinese visitors away (http://www.telegraph.co.uk/finance/china-business/9835438/Britain-is-driving-Chinese-visitors-away.html)
30 Jan 2013
 
Britain's £1.2bn Chinese visa 'own goal' (http://www.telegraph.co.uk/finance/china-business/9835571/Britains-1.2bn-Chinese-visa-own-goal.html)
30 Jan 2013
 
Foreign investment into China drops to lowest level since 2009 (http://www.telegraph.co.uk/finance/china-business/9807052/Foreign-investment-into-China-drops-to-lowest-level-since-2009.html)
16 Jan 2013
 
China services sector grows for fourth month (http://www.telegraph.co.uk/finance/china-business/9845271/China-services-sector-grows-for-fourth-month.html)
03 Feb 2013
 

The surplus will disappear soon after 2020. A decade after that China will face a labour shortage of almost 140m workers, surely the greatest jobs crunch ever seen. “This will have far-reaching implications for both China and the rest of the world,” said the IMF.
(http://i.telegraph.co.uk/multimedia/archive/02469/IMF-graph-030213_2469807c.jpg)</IMG>
Source: IMF
These farm workers are the footloose migrants that pour into the cities from the interior, the raw material of China’s manufacturing workshops They are carefully regulated by the semi-feudal Hukuo system to keep their families tied to villages at home, and to keep the lid on social revolt.
There is little Beijing can do to head off the shock. The effects of low fertility rates - and the one child policy - are already baked into the pie. It would take half a century to turn around the demographic supertanker.
The Lewis Point, named after St Lucia's Nobel economist Sir Arthur Lewis, is when the supply of workers dries up and city wages soar. It is when labour turns the tables on capital, and profits crash.
You could argue that such a process already well under way, and is why Chinese equities are trading at a third of their 2007 peak in real terms. Manufacturing pay has risen 16pc a year over the last decade in the East Coast hubs of Shenzhen, Beijing, Shanghai and Tianjin, though this slowed sharply in 2012.
Boston Consulting Group says that “productivity-adjusted wages” were just 22pc of US levels as recently as 2005. They will reach 43pc by 2015, or 61pc for the American South.
It is a key reason why General Electric, Ford, Caterpillar and others are “re-shoring” from China back to the US, though cheap shale gas, a weaker dollar, and shipping costs all play their part.
This is no bad thing. The world economy is rebalancing. China’s current account surplus has fallen from 10pc of GDP to just 2.5pc.
China’s corrosive gap between rich and poor should narrow. The GINI coefficient measuring inequality should come down from stratospheric levels, 0.61 according to researchers at Chengdu University.
Yet it is also a dangerous moment for Beijing. The Lewis Point is the great test for catch-up economies, when they can no longer rely on cheap labour, copied technology, and export-led growth to keep the game going.
The air is thinner at the technology frontier. Success depends on such intangibles as the rule of law and the free flow of ideas. Those that fail to adapt in time slide into the `middle income trap’, and most do fail.
The Soviet Union failed. The Philippines -- richer than Korea in the 1950 -- failed. Most of the Mid-East failed. So did most of Latin America in the 1960s and 1970s, and it is far from clear that Argentina and Brazil will break free this time.
We still do not know which way China is going to go under Xi Jinping. Vested interests - aligned with Maoist nostalgics - are putting up a formidable fight against reformers. It is worth reading an investigative series by Caixin showing how close hardliners came at different times to reversing Deng Xiaoping’s free-market drive. Nothing is set in stone.
What we see so far is that the Politburo has turned on the credit spigot again, and the reforms are mostly talk. Railway investment almost doubled in the second half of last year. The authorities at all levels have pledged stimulus worth $2 trillion dollars since the economy swooned last year. Some of it is a fictional wish-list, but some is real.
The shares of construction firms have surged since premier Li Keqiang uttered the magic words: “unleashing urbanisation as the most important growth engine”. Cynics suspect that China’s leaders are reverting to bad old ways: manic over-investment, more steel and concrete
George Magnus from UBS said investment made up 55pc of all growth in 2012, and will soon have to reach 60pc to keep up the pace. It is becoming unhinged, a sort of Ponzi scheme.
The boom is rotating, of course, which makes it harder to read. The epicentre is moving West, deep into the Upper Yangtze and heartland regions holding 700m people.
The Sichuan capital of Chengdu is completing the world’s biggest building, a glass and steel pagoda. This will soon be eclipsed for sheer chutzpa by the world’s tallest tower in Changsha, to be erected in three months flat.
Standard Chartered has just upgraded its China growth forecast to 8.3pc year and 8.2pc next, and others are doing much the same. They are probably right, but one watches this latest spree with a mixture of awe and alarm.
The balance sheets of China’s banks have been growing by over 30pc of GDP a year since the Lehman crisis and are still growing at a 20pc, wildly exceeding the safe speed limit.
Fitch Ratings said fresh credit added to the Chinese economy over the last four years has reached $14 trillion, if you include shadow banking, trusts, letters of credit and off-shore vehicles. This extra blast of loan stimulus is roughly equal to the entire US commercial banking system.
The law of diminishing returns is setting in. The output generated by each extra yuan of lending has fallen from 0.8 to 0.35, according to Fitch.
Mr Magnus said credit has reached 210pc of GDP - far higher than other developing countries - and only half of new loans are “plain vanilla” under the full control of regulators.
How and when this will end is anybody’s guess. He fears a “Minsky Moment” when the investment bubble pops, as such bubbles always do.
My guess is that there is one last cycle of Chinese fever to enjoy -- if that is right word -- before the aging crunch and the credit hangover combine with toxic effect. One thing is for sure: a middle-income country with a shrinking work force is not about to displace the United States as global hegemon. [/list]
Title: Re: Official Chinese Toast Thread
Post by: g on February 07, 2013, 04:28:58 AM
Quote
Thank God GO is not Chinese.

I have an Oriental buddy that watches out for my welfare and safety.

                                                     
oddjob
oddjob


Title: Official Chinese Toast Thread: China LOVES the US Dollar Again!
Post by: RE on February 22, 2013, 01:52:42 AM
More PUKE off the keyboard of Illuminati SHILL Ambrose Evans-Pritchard who changes his Opinion faster than Kim Kardashian changes clothes. How much did the FOREX speculators at Goldman pay Ambrose for this one?

Damn right the Chinese want Dollars, they wanna GTFO of Euro-Dodge!!

Amerika is"Roaring Back to Life". "the dollar will remain the world’s paramount reserve currency for decades to come."
hahahahahahahaha.

Boy, when this sucker BLOWS, it's gonna be something to behold indeed.

RE

China loves the US dollar again as America roars back (http://www.telegraph.co.uk/finance/currency/9881410/China-loves-the-US-dollar-again-as-America-roars-back.html)

China’s central bank has radically revised its view of US economic and strategic power, predicting that the dollar will remain the world’s paramount reserve currency for decades to come.

(http://i.telegraph.co.uk/multimedia/archive/02486/dollar_2486524b.jpg)

Dr Jin said the world was moving to a '1+4' system, with the greenback serving as the anchor of global payments Photo: Bloomberg News

 By Ambrose Evans-Pritchard
7:11PM GMT 19 Feb 2013
353 Comments

Jin Zhongxia, head of the central bank’s research institute, said America’s energy revolution and export revival had shaken up the global landscape and would lead to a stronger dollar over time. “The dollar’s global dominance will continue,” he said.

Dr Jin said the world was moving to a “1+4” system, with the greenback serving as the anchor of global payments, supplemented by “four smaller reserve currencies” – the euro, sterling, yen and yuan.

“Compared with the euro area, the dollar zone has much greater resilience to shocks. The debt crisis in the euro area has demonstrated the structural weakness of this currency,” he wrote in a paper for the February bulletin of the Official Monetary and Financial Institutions Forum.

The comments suggest a profound shift in thinking about the US since the financial crisis five years ago, when premier Wen Jiabao questioned if Chinese holdings of US Treasuries were “safe”, and the central bank issued a paper calling for a “global currency” run by the International Monetary Fund.

The prevailing view in Beijing was that America had been toppled as a great power and was crippled by debt.

China has since begun to face its own problems as it grapples with the hangover of $14 trillion (£9 trillion) of credit growth since 2009 and surging wage costs.

The advantage is shifting back to the US. A so-called “manufacturing renaissance” is under way as US companies bring home plants to exploit cheap shale gas and lower transport costs.

A report by Citigroup said the explosive growth of US oil and gas output over the past year had exceeded the “wildest dreams of energy analysts”. The US has halved its oil imports since 2005 and is moving “rapidly towards self-sufficiency”, turning global geo-politics on its head.

Citigroup said lower energy imports and the revival of chemical industries would cut the US current account deficit by three quarters, eliminating a key cause of dollar weakness.

China’s central bank has clearly lost its earlier enthusiasm for the euro project, chastened by the debt crisis of the past three years. Dr Jin said EMU lacked the flexibility and fiscal unity needed to cope with crises, while the rigid fixed-exchange system was ill-adapted to shocks.

The informal dollar zone – a worldwide nexus – was more supple. Weaker states were forced to put their house in order before they reached acute crisis, or to devalue. “The dollar zone looks more loosely connected, but in reality it is more coherent than the euro area,” he said.
Title: Re: Official Chinese Toast Thread
Post by: Petty Tyrant on February 22, 2013, 05:14:17 AM
Thats the GREEN KOOL-AID, lol. As they say, tell someone what they want to hear and they will believe anything.
Title: Why A China Crash May Be Imminent
Post by: RE on February 23, 2013, 05:51:08 PM
(http://howtosavetheworld.ca/images/wile-e-coyote.jpg)

RE

Why A China Crash May Be Imminent (http://asiaconf.com/2013/02/22/a-china-crash-may-be-imminent/)

Double, double toil and trouble
Why the noose is tightening
Can China prevent a crash?
Sell China stocks

Those silly enough to believe that China’s economy has “recovered” should at least been given some pause by this week’s events. For China surprised the market with moves to reduce liquidity in the banking system and curb the property market. Clearly, the government is worried about the re-appearance of bubbles due to excessive credit growth. And they should be worried because it’s obvious that the bubbles which caused China’s slowdown never went away. In fact, they’ve gotten worse from government stimulus designed to prevent a hard economic landing. These government actions have made the chances of an imminent China crash more likely.
Double, double toil and trouble
Just when the world had bought into a Chinese economic recovery, along comes the government throwing proverbial spanners in the works. Actually, they’re more like grenades.
According to Bloomberg, China’s central bank has drained Rmb910 billion (US$145 billion) from the banking system this week, a record high weekly net drain. Reducing liquidity after Chinese New Year is normal, as is increasing liquidity prior to this holiday. But the extent of the liquidity reduction dwarfed the Rmb 662 billion added before the New Year.
To put this in some context, the People’s Bank of China has now drained a net Rmb548 billion from the banking system this year. This compares with a net injection of Rmb1.44 trillion last year.
On top of this news came calls from outgoing Chinese Premier Wen Jiabao for local governments to impose home price restrictions and “decisively” curb housing market speculation. He described house price gains as “excessively fast” and also ordered major municipalities to publish annual price control targets.
It’s obvious that the government is concerned with three things:
[LIST=1]
Why the noose is tightening
The vast majority of economists will tell you that the government’s actions are prudent and will ensure that the economic recovery remains on track. They’ll site all kinds of data to show that a recovery is on the cards.
After all, GDP increased 7.9% in the fourth quarter of 2012, compared with the 7.4% in the third quarter. Exports in January grew 25% from a year earlier, while imports surged 29%. New lending from banks in January more than doubled from December. Total social lending – a broad measure of liquidity in the economy – increased to Rmb2.5 trillion in January, from Rmb1.63 trillion in December. Impressive stats indeed.
But I’d suggest that economists who take this data at face value are either extraordinarily lazy, ignorant of basic economics or both. Here are three initial quibbles:
[LIST=1]
So the extent of the economic recovery as indicated by the data needs to be questioned. More importantly though, a simple, broader question needs to be asked: what has driven this seeming recovery? And it’s here that the answer should concern everyone.
For China is repeating the same mistakes that it made post the financial crisis. Back then, the government unveiled an enormous Rmb4 trillion (US$640 billion) package to ward off an economic slump after developed market economies crashed. It primarily stimulated the economy via infrastructure and property-related investment, fuelled almost exclusively by debt. It seemingly saved the day as China’s economy roared back into life.
But then the hangover began in 2011. The investment garnered little if any returns in industries which were already suffering from over-capacity. Property prices started levelling off after a decade of super-charged returns, as it became obvious that demand couldn’t meet the endless supply. And bad debts at banks undoubtedly skyrocketed, but have remained hidden to this day.
An investment-driven, debt-fuelled binge had seemingly come to an end. Even the government had privately told investors and stockbrokers that this binge was a mistake.
I, for one, believed them. Six months ago, I thought an economic soft landing was likely as the government wouldn’t repeat the mistakes of 2009-2010. But that assumption was wrong.
As the economic downturn gathered steam in the second quarter of last year, the government turned to the easiest way it knew how to boost economic activity: fixed asset investment funded by debt. The central government officially unveiled a Rmb1 trillion (US$160 billion) infrastructure package in September last year. Unofficially, local governments launched a similar package totalling up to Rmb13 trillion (US$2.1 trillion).
How much of this money has been spent isn’t clear. But infrastructure spend and property investment figures suggest much of it has been put to work. And total credit financing figures, as mentioned above for January, are showing a sharp increase from the first half of last year.
The unique thing this time around is that the debt financing is being done less via traditional banks but non-banks. In 2012, total credit financing grew 20%, with trust loans up 80%, FX loans up 27% and bond financing increasing 45%.
(http://asiaconf.com/wp-content/uploads/2013/02/China-NGDP-vs-credit-outstanding-Bernstein-Research.png) (http://asiaconf.com/wp-content/uploads/2013/02/China-NGDP-vs-credit-outstanding-Bernstein-Research.png)
Credit Suisse estimates that the so-called shadow banking system now totals Rmb22.8 trillion or 44% of GDP, making it the second largest asset class in China!
(http://asiaconf.com/wp-content/uploads/2013/02/China-shadow-banking.png) (http://asiaconf.com/wp-content/uploads/2013/02/China-shadow-banking.png)
All of this means that an economy that was unbalanced and fragile before 2012, has become more so thanks to the governments actions. The options to maintain the investment-led, credit boom are narrowing, and fast. As hedge fund titan Jim Chanos said of China: “They’re on a treadmill to hell”. Meaning, they either try to keep the bubbles going to maintain economic growth or they don’t and risk an immediate economic crash.
Can China prevent a crash?
Now, the same economists who proclaim a Chinese economic recovery will also suggest that a hard landing isn’t possible because China has the money to throw at any problems. They’ll point to considerable savings, at 53% of GDP, and US$3.3 trillion in foreign exchange (forex) reserves.
There are several large holes in this argument. China’s forex reserves cannot be swiftly used to help prevent an economic crisis. The majority of these reserves are tied up in U.S. government bonds. If China decided to sell just 10% of these bonds to throw at its own economy, it would have severe consequences. U.S. interest rates would spike, the U.S. economy would tank, closely followed by economies around the world. China’s export-reliant economy would also be impacted. In other words, the forex reserves argument is largely an illusion.
That’s not too mention that China’s forex reserves have crawled to a stand-still: they’re not growing anymore. If these reserves start to decline, it would mean China would need to start selling renminbi to maintain its currency peg. This would be deflationary.
The savings argument has some more merit. But anyone that has money in China and can get it out, is doing just that at present. The Chinese have few good options as deposit rates are negligible, they don’t trust the stock market given its woeful performance since 2007 and property has become a less reliable investment too.
The other question that needs to be asked is: firepower for what? How can the money be productively used to both prevent a crash and re-orientate the economy to a more sustainable path. The likely answer is that it can’t be: the bubbles have gone on for too long and are too large.
The best solution for China is to reduce its reliance on investment and promote the services sector. Doing this quickly though would mean plummeting economic growth. Doing it slowly would the bubbles of today could get larger and more problematic.
Sell China stocks
In October last year, I suggested that it was time to buy Chinese stocks. It was a short-term trade based on the extreme negative sentiment then towards both China and its stocks. It was not based on an improving economy, but the fact that a lot of the negativity had been baked into share prices.
I was about five weeks early in picking a bottom to the market, but since then there have been some nice gains. Now though is the time to get much more cautious and sell out of China stocks. And also think carefully about the wider ramifications of a potential China hard landing, in terms of countries and sectors most impacted (think Australia, Canada, industrial metals etc).
And that’s it for this week.
Title: Re: Official Chinese Toast Thread
Post by: JoeP on March 16, 2013, 02:38:41 PM
China: 'Airpocalypse' Now (http://www.zerohedge.com/news/2013-03-16/china-airpocalypse-now)
Title: Re: Official Chinese Toast Thread: China Trade Balance Turns To Deficit
Post by: g on April 11, 2013, 04:36:09 AM
4/10/2013 1:23 AM ET

China unexpectedly reported a trade deficit for March amid a surge in imports and a weaker expansion in exports, official data showed Wednesday. Separately, Fitch Ratings downgraded the country's local currency sovereign rating on Tuesday, citing surging credit growth in the country.

The General Administration of Customs said that the trade balance turned to a deficit of $884 million in March, belying expectations for a surplus of $15.15 billion. In February, the balance was in a surplus of $15.23 billion.

Exports rose 10 percent year-on-year in March, weaker than forecasts for a 11.7 percent expansion and the 21.8 percent increase witnessed in February.

On the other hand, imports rose 14.1 percent annually last month, beating forecast of 6 percent growth and reversing most of the 15.2 percent drop in the previous month.

The government targets an 8 percent growth in trade this year, which is lower than the previous year's target of 10 percent growth.

In a report on Tuesday, the Asian Development Bank said that the ongoing sluggishness in the global economy will remain a drag on Chinese exports, while further headwinds from Europe, China's largest trading partner, and the possibility of renewed inflationary pressures pose downside risks to the overall outlook.
http://www.rttnews.com/2091430/china-trade-balance-unexpectedly-turns-to-deficit-as-imports-surge.aspx?type=aeco (http://www.rttnews.com/2091430/china-trade-balance-unexpectedly-turns-to-deficit-as-imports-surge.aspx?type=aeco)  :icon_study:
Title: Alarm Bells Go Off in China
Post by: RE on April 13, 2013, 10:42:52 PM
This will end well. From Brit Prep School Brat Ambrose.  Can-U-Spell TOAST?

RE

China's shadow banking boom rings alarm bells (http://www.telegraph.co.uk/finance/china-business/9988213/Chinas-shadow-banking-boom-rings-alarm-bells.html)

(http://i.telegraph.co.uk/multimedia/archive/02533/Beijing_2533937b.jpg)

New loans jumped by $400bn, mostly in the less regulated pockets of the banking system. Trust loans have surged by 360pc over the past year.

Wang Yongping, head of China’s Commercial Real Estate Association, said there is a major bubble in office property across the country as developers switch strategy to evade curbs on residential homes, with extreme over-building in second tier cities or deep in the interior.

The vacancy rate in Shenyang has hit 24.3pc, with 55 giant projects still being built. “It will take at least five years to find enough tenants to fill the vacancies if no new project is approved,” he told Caixin magazine. Mr Wang said there had been wild construction in the western city of Chengdu, as well as Tianjin on the coast. “The supply is huge in these cities.”

The gung-ho mayor of Chengdu is explicitly aiming to match and surpass the massive scale of building seen in Shanghai, hoping to turn the Sichuan capital into one of the world's top cities by the end of the decade.

Fitch Ratings downgraded China’s sovereign debt this week, warning that torrid loan growth had put “financial stability” at risk. “Total credit including various forms of 'shadow banking' activity may have reached 198pc of GDP,” it said. This is up from 125pc four years ago.

The pace of credit expansion has been much faster than in the US, Japan and Korea in the four years before each of their bubbles burst.

Fitch said credit has jumped from $9 trillion to $23 trillion since early 2009. The increase alone is equal to the entire US banking system. Yet the potency of these loans is fading. The extra output generated each yuan of credit has dropped from 0.8 to 0.35.

Fitch’s Charlene Chu said the shadow nexus is flourishing because lenders are “trying to push things off the bank’s balance sheet so they can be in compliance with the required loan-to-deposit ratio”.

Beijing tried to cool the property boom with loan curbs from 2010 onwards but triggered an industrial recession last year in the process. The Politburo was shocked by the severity of the downturn. The concern is that they are turning a blind eye again to excess credit to protect jobs and boost growth, but risks are rising and effect is diminishing. “Economic recovery has been shallow. It is not sustainable,” said Zhiwei Zhang from Nomura, citing weak electricity use and freight traffic.

Professor Michael Pettis from Beijing University said it is unclear whether the new leadership under Xi Jinping really will wean China off dependence on exports and over-investment. It has been the same rhetoric for the past two years.

Financier George Soros warned that there could ultimately be a “run” on the state-owned banks if China fails to get a grip soon. “This is similar to what happened in the US with subprime mortgages. The authorities are aware of the problem, and they also have very substantial resources available to deal with the problem,” he told the South China Morning Post.

“They also know what happened in America in 2008. So I think they will be able to deflate this incipient bubble without a serious financial crisis. This is the problem the new leadership now faces.”
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on April 17, 2013, 07:31:25 PM
I've been calling this one for YEARS


Yep. And you've been WRONG for years, like all of the other China
bears. Oh, some day you'll be right, briefly. Some day China will
take a hit, or undergo a big crisis, perhaps even collapse in some
fashion. And you'll be giddy with delight, yelping "see! see! told ya!"
But your gloating won't last long, because China's doldroms won't
last long. They'll rebound out of it and carry on. They have far too
much momentum and strength to collapse into the permanent
dysfunctionality and entropy that you hope for.
Title: Re: Official Chinese Toast Thread
Post by: RE on April 17, 2013, 10:11:43 PM

Yep. And you've been WRONG for years, like all of the other China
bears.

Wrong?  Moi?

(http://onemansblog.com/wp-content/uploads/2009/05/inconceivable.jpg)

Welcome back from Lurkerville Alan!

RE
Title: Economic Crisis in China
Post by: RE on May 07, 2013, 11:56:59 PM
The latest from Ambrose on Chinese Toast.  :icon_mrgreen:

RE

Policy battle rages in China as slowdown feeds 'sense of crisis' (http://www.telegraph.co.uk/finance/china-business/10039976/Policy-battle-rages-in-China-as-slowdown-feeds-sense-of-crisis.html)

Anti-reform hardliners in China's Communist Party have become seriously alarmed by the sharp slow-down in economic growth,  creating a "task-force" to crank up production.

(http://i.telegraph.co.uk/multimedia/archive/02353/china-flag-marsh_2353678b.jpg)
China's Caixin Magazine reports that there is a growing "sense of crisis" not felt since the depths of the global banking crash in 2008-2009.
Photo: Quirky China News / Rex Features

By Ambrose Evans-Pritchard

4:17PM BST 06 May 2013

China's Caixin Magazine reports that there is a growing "sense of crisis" not felt since the depths of the global banking crash in 2008-2009.

The State-owned Assets Supervision and Administration Commission (SASAC) has assembled a team to "protect economic growth" and pressure state companies to boost jobs at all costs.

SASAC is the bastion of vested interests and controller of 115 state behemoths with assets above $6 trillion and lock on much of the economy.

The move comes amid further signs that growth is faltering across all fronts. HSBC's gauge of Chinese services fell three points to 51.1 in April, the lowest in almost two years.

The broader composite index also dropped sharply to a six-month low of 51.1 and is now barely above the contraction line, with new orders trailing badly. The economy grew 7.7pc in the first quarter, slower than expected.

The Shanghai index of stocks rolled over in early March and has given up the half the gains since the rally started late last year. It has dropped almost 60pc since its peak in 2008 and is now trading at levels comparable to 2003.

China's downturn is rippling through commodity markets, led by a major sell-off of base metals this year. Credit Suisse said the short-covering rally over the last few days is likely to prove a "dead cat bounce" as China's structural slow-down and a weakening global economy overwhelm all else. It expects copper to "bite the dust", falling to 2009 levels near $6,000 a tonne.

China's authorities have been trying to stop property speculation with loan curbs but it is proving hard to pop the housing boom without popping the economy itself.

New so China's growth task-force comes amid reports that SASAC has ordered state firms to go for expansion and disregard other objectives such as investing in new technology.

The policy drive cuts across efforts by the reformist premier Li Keqiang to wean China off uber-growth and shift to a different development model. He has asked China's State Council to study ways to cut growth to 7pc next year, deemed the safe speed limit.

Resistance from SASAC is thwarting his efforts to reduce Beijing's stifling control over production. State firms have grown fourfold since 2003, meaning that the economy is being renationalised. The unreformed behemoths gobble up most of the available bank credit even though many are loss-making, or are grossly inefficient.

Mr Li was a key sponsor of a report last year by China's Development Research Council and the World Bank warning that the country has already picked the low-hanging fruit of catch-up growth and can no longer rely on cheap exports and imported know-how.

The report has become the policy Bible for reformers. It said China risks languishing in the sort of "middle income trap" that has ensnared much of Latin America and the Middle East at different times, unless it embraces the free market and fosters bottom-up thinking.

"The forces supporting China's continued rapid progress are gradually fading. The government's dominance in key sectors, while earlier an advantage, is in the future likely to act as a constraint on creativity," it said.

"The role of the private sector is critical because innovation at the technology frontier is quite different in nature from catching up technologically. It is not something that can be achieved through government planning."

Mr Li faces powerful resistance from entrenched interests and those in the Politburo who fear that China risks a social explosion unless it keeps the economy on steroids.

Pressure is building for yet another burst of easy credit, even though the "economic efficiency" of debt is collapsing. The output gained from each extra yuan of credit has fallen from a ratio of 0.8 to 0.35 since 2008, a warning sign that the cycle has played out.

Fitch downgraded China's debt in April, warning that credit has already jumped from 125pc to 200pc of GDP in four years, much of it in shadow banking. While another burst of loans may boost growth in the short run, it risks storing up ever greater problems.

President Xi Jinping has yet to tip his hand in what amounts to a civil war over policy and China's economic destiny. Experts say he tilts back and forth between the reformist and dirigiste wings of the party. The Standing Committee appears evenly split.

The International Monetary Fund warned last week that China is in danger of becoming "old before it is rich" as the demographic crisis hits. The work-force has already begun to shrink, contracting by 3.5m last year.

The IMF said China and other emerging economies in Asia must embrace the rule of law, sound institutions, credit reform, and "limited government involvement in the economy", or risk falling into the middle income trap.
Title: Re: Official Chinese Toast Thread
Post by: RE on June 18, 2013, 03:51:16 PM
(http://thisisnotalovesong.files.wordpress.com/2007/07/toast.jpg)
Sing along with RE!  The Chinese are...

From Ambrose.

RE


Fitch says China credit bubble unprecedented in modern world history (http://www.telegraph.co.uk/finance/china-business/10123507/Fitch-says-China-credit-bubble-unprecedented-in-modern-world-history.html)


China's shadow banking system is out of control and under mounting stress as borrowers struggle to roll over short-term debts, Fitch Ratings has warned.

(http://i.telegraph.co.uk/multimedia/archive/02558/shanghai2_2558283b.jpg)
Fitch warned that wealth products worth $2 trillion of lending are in reality a "hidden second balance sheet" for banks, allowing them to circumvent loan curbs and dodge efforts by regulators to halt the excesses. Photo: Alamy
Ambrose Evans-Pritchard

By Ambrose Evans-Pritchard, International Business Editor

4:12PM BST 16 Jun 2013

The agency said the scale of credit was so extreme that the country would find it very hard to grow its way out of the excesses as in past episodes, implying tougher times ahead.

"The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially into a Japanese-style deflation," said Charlene Chu, the agency's senior director in Beijing.

"There is no transparency in the shadow banking system, and systemic risk is rising. We have no idea who the borrowers are, who the lenders are, and what the quality of assets is, and this undermines signalling," she told The Daily Telegraph.

While the non-performing loan rate of the banks may look benign at just 1pc, this has become irrelevant as trusts, wealth-management funds, offshore vehicles and other forms of irregular lending make up over half of all new credit. "It means nothing if you can off-load any bad asset you want. A lot of the banking exposure to property is not booked as property," she said.

Concerns are rising after a string of upsets in Quingdao, Ordos, Jilin and elsewhere, in so-called trust products, a $1.4 trillion (£0.9 trillion) segment of the shadow banking system.

Bank Everbright defaulted on an interbank loan 10 days ago amid wild spikes in short-term "Shibor" borrowing rates, a sign that liquidity has suddenly dried up. "Typically stress starts in the periphery and moves to the core, and that is what we are already seeing with defaults in trust products," she said.

Fitch warned that wealth products worth $2 trillion of lending are in reality a "hidden second balance sheet" for banks, allowing them to circumvent loan curbs and dodge efforts by regulators to halt the excesses.

This niche is the epicentre of risk. Half the loans must be rolled over every three months, and another 25pc in less than six months. This has echoes of Northern Rock, Lehman Brothers and others that came to grief in the West on short-term liabilities when the wholesale capital markets froze.

Mrs Chu said the banks had been forced to park over $3 trillion in reserves at the central bank, giving them a "massive savings account that can be drawn down" in a crisis, but this may not be enough to avert trouble given the sheer scale of the lending boom.

Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. "They have replicated the entire US commercial banking system in five years," she said.

The ratio of credit to GDP has jumped by 75 percentage points to 200pc of GDP, compared to roughly 40 points in the US over five years leading up to the subprime bubble, or in Japan before the Nikkei bubble burst in 1990. "This is beyond anything we have ever seen before in a large economy. We don't know how this will play out. The next six months will be crucial," she said.

The agency downgraded China's long-term currency rating to AA- debt in April but still thinks the government can handle any banking crisis, however bad. "The Chinese state has a lot of firepower. It is very able and very willing to support the banking sector. The real question is what this means for growth, and therefore for social and political risk," said Mrs Chu.

"There is no way they can grow out of their asset problems as they did in the past. We think this will be very different from the banking crisis in the late 1990s. With credit at 200pc of GDP, the numerator is growing twice as fast as the denominator. You can't grow out of that."

The authorities have been trying to manage a soft-landing, deploying loan curbs and a high reserve ratio requirement (RRR) for banks to halt property speculation. The home price to income ratio has reached 16 to 18 in many cities, shutting workers out of the market. Shadow banking has plugged the gap for much of the last two years.

However, a new problem has emerged as the economic efficiency of credit collapses. The extra GDP growth generated by each extra yuan of loans has dropped from 0.85 to 0.15 over the last four years, a sign of exhaustion.

Wei Yao from Societe Generale says the debt service ratio of Chinese companies has reached 30pc of GDP – the typical threshold for financial crises -- and many will not be able to pay interest or repay principal. She warned that the country could be on the verge of a "Minsky Moment", when the debt pyramid collapses under its own weight. "The debt snowball is getting bigger and bigger, without contributing to real activity," she said.

The latest twist is sudden stress in the overnight lending markets. "We believe the series of policy tightening measures in the past three months have reached critical mass, such that deleveraging in the banking sector is happening. Liquidity tightening can be very damaging to a highly leveraged economy," said Zhiwei Zhang from Nomura.

"There is room to cut interest rates and the reserve ratio in the second half," wrote a front-page editorial today in China Securities Journal on Friday. The article is the first sign that the authorities are preparing to change tack, shifting to a looser stance after a drizzle of bad data over recent weeks.

The journal said total credit in China's financial system may be as high as 221pc of GDP, jumping almost eightfold over the last decade, and warned that companies will have to fork out $1 trillion in interest payments alone this year. "Chinese corporate debt burdens are much higher than those of other economies. Much of the liquidity is being used to repay debt and not to finance output," it said.

It also flagged worries over an exodus of hot money once the US Federal Reserve starts tightening. "China will face large-scale capital outflows if there is an exit from quantitative easing and the dollar strengthens," it wrote.

The journal said foreign withdrawals from Chinese equity funds were the highest since early 2008 in the week up to June 5, and withdrawals from Hong Kong funds were the most in a decade.
Title: Re: Official Chinese Toast Thread
Post by: agelbert on June 18, 2013, 04:42:37 PM
http://www.youtube.com/v/HHo-gnc0gw0#&fs=1
:ernaehrung004: 

Make sure you don't have the wrong TOAST! (http://www.freesmileys.org/emoticons/tuzki-bunnys/tuzki-bunny-emoticon-007.gif)

The below timeless bit of wisdom was in reference to a 2011 hit piece on China. I don't think much has changed.

Quote
... suppose 1,000 people were on a sinking ship and the government was able to rescue 90% of them.

You might have one newspaper write, “The brave actions of the rescuers helped save 900 people,” or another newspaper might write, “Careless plan results in the death of 100 passengers.”

It should be obvious to everyone that the corporate media has an agenda.
;)

http://blog.hiddenharmonies.org/2011/07/perspectivehere-chimes-in-on-anti-china-propaganda/ (http://blog.hiddenharmonies.org/2011/07/perspectivehere-chimes-in-on-anti-china-propaganda/)
Title: Hammer Time for China
Post by: RE on June 20, 2013, 05:29:50 AM
(http://theoffdutymime.files.wordpress.com/2012/02/scooby_doo_2.jpeg)
Ruh Roh.

RE

China Interbank Market Freezes As Overnight Repo Explodes To 25%
(http://www.zerohedge.com/news/2013-06-19/china-interbank-market-freezes-overnight-repo-explodes-25)

It seems liquidity (or counterparty mistrust) is beginning to reach extreme levels in China as the nation's banking system is now quoting overnight repo transactions at 25%. The explosion in funding costs echoes the collapse in trust (and surge in TED spread) among US banks in the run-up to the Lehman bankruptcy. MSCI Asia-Pac stocks are down over 3% with China's Shanghai Composite -2.5% at seven-month lows.

    China’s 1-day Repo Rate Climbs to Highest Since at Least 2006
    MNI - CHINA OVERNIGHT REPO FIXING AT RECORD HIGH

China's bond market is also collapsing:

    Yield on 3.1% govt bonds due January 2016 jumps 39 bps to 3.749%, biggest rise since notes were issued in January
Title: Re: Official Chinese Toast Thread
Post by: g on June 23, 2013, 05:56:11 AM

 My Dear Friends,

                                                             
clip image00229
clip image00229

Please remember when it comes to recent dire Western analyst comments on China that China is still a Maoist country, but interested in economics more than war.

The most dire comments common towards China in the West fail to understand how a Maoist country will react under pressure.


Respectfully,
Jim Sinclair
Title: Re: Official Chinese Toast Thread
Post by: RE on June 23, 2013, 06:11:09 AM

Please remember when it comes to recent dire Western analyst comments on China that China is still a Maoist country, but interested in economics more than war.

The most dire comments common towards China in the West fail to understand how a Maoist country will react under pressure.


Respectfully,
Jim Sinclair

Where does that come from?  Is Jim Sinclair making THREATS here at the behest of the Chinese?

RE
Title: Re: Official Chinese Toast Thread
Post by: g on June 23, 2013, 06:42:24 AM

Please remember when it comes to recent dire Western analyst comments on China that China is still a Maoist country, but interested in economics more than war.

The most dire comments common towards China in the West fail to understand how a Maoist country will react under pressure.


Respectfully,
Jim Sinclair

Where does that come from?  Is Jim Sinclair making THREATS here at the behest of the Chinese?

RE

No, it was just an isolated quote on it's own, not part of an article.  Your reaction to it surprised me, but proves the point no on who thinks like a westerner can understand the Chinese mind and how it works or will work in a financial calamity

Remember the Tientsin Square uprising? They don't fool around.

I took it to remind folks they have total dictatorial powers over their system and can declare laws overnight that could never be done here without mayhem

Close all markets.

Instant rationing of necessities declared.

Bank Closures and Canceling of debts.

Martial law

It would not be like here where we have a left right battle and arguing about what to do.

You, of course, may interpret the observation of Jim in any way you wish, but I got no war threat from it.   :dontknow:
Title: CHINA CRASHING!!!
Post by: RE on June 24, 2013, 12:39:44 AM
Shaudenfreude Time!  Boy, it sure is great to be proved correct after all these years of hammering on this one.  :icon_mrgreen:

From ZH, and KATY BAR THE DOOR!

SHORT THE PHONE BOOK!


RE

China Crashing: Shanghai Composite Tumbles Most Since 2009 (http://www.zerohedge.com/news/2013-06-24/china-crashing-shanghai-composite-tumbles-most-2009)

Submitted by Tyler Durden on 06/24/2013 02:51 -0400

Those who have been holding their breath until China joins the overnight market fireworks can finally exhale.

Following yesterday's unprecedented formal announcement of epic capital misallocation, the PBOC tried to continue the damage control when a few hours ago it announced that Chinese banking system liquidity "is at a reasonable level", but that banks must control liquidity risks from fast capital expansion, especially credit expansion, according to a statement on management of banks’ liquidity on website. The implication: no easing any time soon, and sure enough no repo or reverse repo activity was logged in the overnight session meaning Chinese banks, for the time being, continue to be on their own, without any hope of the central bank stepping in to bail them out.

The PBOC announcement appears to have restored some stability in the interbank market if only for a very brief amount of time: the 1 Month SHIBOR drops 234 bps, most since Oct. 2007, 7.3550%, with the one-day repo rate falling 204 bps to 6.6540%. Longer-term liquidity also improved modestly, with the seven-day repo rate drops 159 bps after sliding 237 bps on June 21. However, as Market News reported , the PBOC won’t cut reserve ratio, interest rates in near term, and if anything will just use more open-market operations. The problem with this kind of opaque intervention is that it once again raises the specter tha behind the scenes one or more banks are getting direct bailouts. In other words, look for real interbank liquidity to be abysmal at best.

Not helping the PBOC's credibility was the news that China Development Bank canceled a bond sale up to CNY20 billion planned for tomorrow for "reasons."

Certainly not helping China was that late on Sunday Goldman cut its China growth forecasts for 2013 and 2014, "on the account of soft cyclical signals and recent tightening of financial conditions. We now expect real GDP growth to be at 7.5% yoy in Q2 2013 (from 7.8% previously), and 7.4% and 7.7% for 2013 and 2014 respectively (from 7.8% and 8.4% previously)."

End result: the Shanghai Composite, which had largely been able to weather the recent dramatic shocks to both liquidity and the economy, finally threw in the towel and crashed. Moments ago the Shanghai Composite fell 5.5%, the biggest intraday slide since August 2009, and dropping below 2,000 for first time since December.

The brodest China index is now down 14% year to date, with the Property Index leads slump with 7.7% drop to lowest since November.

Needless to say the world's second largest economy imploding, and its stock market crashing were enough to send all of Asia lower, with the Nikkei225 unable to sustain gains on a weaker Yen, and swining from up over 1% to down 1.3%. As for that China derivative, Australia and specifically its currency the AUD, it just hit a fresh 52 week low against the USD at 0.9155.

Of course, if the BIS's warning about what is coming to the "developed markets" is accurate, this is nothing but a pleasant rehearsal of what one can expect in the US and in other G-7 places.

As for China, if Goldman is correct, look for much more pain below. Here is the summary of the firm's downgrade of the Chinese economy:

    We are cutting our China growth forecasts for 2013 and 2014, on the account of soft cyclical signals and recent tightening of financial conditions. We now expect real GDP growth to be at 7.5% yoy in Q2 2013 (from 7.8% previously), and 7.4% and 7.7% for 2013 and 2014 respectively (from 7.8% and 8.4% previously).

     

    The recent tightening of the interbank market has sent a strong policy signal that the strong credit growth earlier in the year will likely not continue. We estimate this to tighten the FCI by another 30-40 basis points (bp) in the coming months, in addition to the FCI tightening of 100 bp so far this year driven by the rapid CNY appreciation on a trade-weighted basis.

     

    The liquidity tightening is another indication that the new government has put priorities on tackling the structural problems. These policies help to foster more sustainable medium-term growth, but will test the government’s tolerance for a cyclical downturn. A reversal of the recent tightening is the main upside risk to our new forecast. Continued DM stagnation or spreading overcapacity problems will imply downside risks.
Title: BLOODBATH COMING!!!
Post by: RE on June 24, 2013, 12:52:42 AM
GET YOUR SHORTS IN WHILE YOU CAN, SPORTSFANS! DON'T MISS OUT ON THE OPPORTUNITY OF A LIFETIME TO PROFIT OFF THE MISERY OF THE CHINESE!

RE
Title: Official Chinese Toast Thread: No More One Child Policy
Post by: RE on August 06, 2013, 01:36:31 AM
The new, NEW Chinese Solution to Overpopulation and Resource Depletion...start breeding like rabbits!

The Population Equivalent here of solving a Debt Crisi by issuing more Debt!  LOL.

Below from Ambrose.

This will not End Well.

RE


China to ditch its one-child policy as ageing crisis looms (http://www.telegraph.co.uk/finance/china-business/10221730/China-to-ditch-its-one-child-policy-as-ageing-crisis-looms.html)

China's new leaders are close to abandoning the country's one-child policy, belatedly moving to avert an ageing crunch as the work force goes into sharp decline.


(http://i.telegraph.co.uk/multimedia/archive/01821/china-pop_1821168b.jpg)
The official news agency Xinhua reported that the Family Planning Commission is studying proposals to lift the ban on a second child, if either parent is an only child. Photo: AFP

Ambrose Evans-Pritchard

By Ambrose Evans-Pritchard

6:08PM BST 04 Aug 2013


The official news agency Xinhua reported that the Family Planning Commission is studying proposals to lift the ban on a second child, if either parent is an only child. The body's spokesman said aim is to "improve" family policy, confirming leaks to Chinese newspapers that a major shift is in the works. The new rules are expected to come into force early next year, and may be extended to cover all families by 2015.

Jun Ma from Deutsche Bank said the new policies should shore up the pension system and inject stimulus as China's growth sputters. "As tens of millions of sibling-less people in China are now entering their child-bearing age, we expect this policy shift would induce a baby boom," he said.

The one-child policy dates back to 1971 in its original form and has led to 336m abortions and 222m sterilisations, often badly executed in poor regions. Recent abuses have caused uproar, with photos circulating on the internet of a young mother lying beside a fully formed baby after she had been seized by police for failing to pay the "social compensation fee" for an illegal child. She was forced to undergo an abortion just before her natural birth.

Premier Li Keqiang clearly views the policy an anachronism at a time when China is running out of workers, and faces a demographic time-bomb. There are currently five workers for every pensioner. This ratio will fall to two by 2035.

The policy has always been a patchwork of measures. Ethnic minorities are exempted. Farmers are allowed a second child if the first is a girl. The urban middle class can usually pay the fine, barely enforced in Shanghai where fertility rates are collapsing for other reasons. The shift in policy may come too late to avert an ageing shock. The workforce shrank by 3m last year, an inflection point that has come sooner than expected.

The International Monetary Fund said the working age population will soon go into "precipitous decline". The "reserve army" of rural poor looking for work peaked in 2010 at around 150m. This surplus will disappear soon after 2020. The IMF said there will be a labour shortage of almost 140m workers by the early 2030s with "far-reaching implications".

Demographers say it is unclear whether a two-child policy will set off a baby boom. Fertility rates plunged in Japan, Korea, Taiwan, Singapore and Hong Kong as they became richer, due to a complex interplay of culture and economics.

China is unique in growing old before it is rich, but this may not be a bad thing. Lauren Johnston from Peking University said it was better to get a demographic crisis out the way early. Baby boomers in the West and Japan have swept through like a "plague of locusts", leaving the next generation to cover a colossal debt burden and gilded pensions. "It is much worse to get rich first. What gets left behind is crumbs," she said.


Title: Re: Official Chinese Toast Thread
Post by: RE on August 19, 2013, 07:24:59 AM
Boy, I sure wish I could get some of the old China Bulls from Peak Oil on here and say "I told you so".   :icon_mrgreen:

RE

China Warns It Can't Find Jobs For College Graduates (http://www.zerohedge.com/news/2013-08-19/china-warns-it-cant-find-jobs-college-graduates)

Submitted by Tyler Durden on 08/19/2013 08:58 -0400


While jobs in the US are hardly a success (employment not the movie), it appears that despite the faith that China is still growing at 7.5%, the slowing-growth nation is facing its own job creation nightmare. As China.org reports, this is being called the hardest job-hunting season ever for Chinese graduates - as nearly 7 million of them swarmed into the job market this summer. In a sad reflection of the US, it is becoming increasingly difficult for college graduates to secure a job in recent years (let alone a degree-required job) as the number of unemployed graduates has nearly doubled in the last 4 years (from 9% of graduates in 2008 to 17.5% now).

 

Via China.org,

    Although China's job market showed resilience in the first half of this year, the problem of creating enough jobs for graduates remains a hard nut to crack.

     

    It is being called the hardest job-hunting season ever for graduates, as nearly 7 million of them swarmed into the job market this summer, adding to the country's job creation pressure amid the ongoing economic slowdown.

     

    It has become increasingly difficult for college graduates to secure a job in recent years. Given the accumulated number of college students who graduated in previous years and failed to find a job, the pressure is growing.

     

    According to the Blue Book of China's Society in 2012, compiled by the Chinese Academy of Social Sciences, about 9 percent of graduates in 2008 couldn't find a job on leaving college. In 2011, 17.5 percent failed to find employment,.

     

    ...

     

    However, the authorities have a clear picture of the difficulties facing young job seekers. Premier Li Keqiang told college graduates that they should not just be content with looking for a job but should consider starting their own businesses when he met students in Lanzhou University on Sunday.

     

    ...

     

    Those measures will surely ease the tension in the job market. But it will be almost impossible for the economy to fully absorb all the unemployed graduates in the short term, because the problem stems, in essence, from the explosive growth of the number of college graduates in recent years thanks to the country's college expansion program that started 10 years ago.

     

    In 2001, China had 1.15 million college graduates. Now the number is more than six times that.

     

    ...

So, let's just run through this:

    1) Credit enabled explosive (mis-allocated capital-based) growth

    2) Explosive growth funded unsustainable jobs

    3) Given the jobs growth (and easy credit) more students went to college

    4) More graduates (thanks to government-sponsored education programs)

    5) Growth 'stabilizes' (or slows)

    6) Graduate unemployment surges

    7) Government recognizes this problem (but it's not structural)

    8) Government solution - more people should become self-employed

Seems the playbook of a quasi-Keynesian dream playing out once again...
Title: Re: Official Chinese Toast Thread: Maybe Not - Other Side of Coin Article?
Post by: g on September 24, 2013, 11:05:10 PM
Speedy Trains Transform China
                                         
24chinarail span articleLarge
24chinarail span articleLarge


September 23, 2013
Speedy Trains Transform China
By KEITH BRADSHER

CHANGSHA, China — The cavernous rail station here for China’s new high-speed trains was nearly deserted when it opened less than four years ago.

Not anymore. Practically every train is sold out, although they leave for cities all over the country every several minutes. Long lines snake back from ticket windows under the 50-foot ceiling of white, gently undulating steel that floats cloudlike over the departure hall. An ambitious construction program will soon nearly double the size of the 16-platform station.

Just five years after China’s high-speed rail system opened, it is carrying nearly twice as many passengers each month as the country’s domestic airline industry. With traffic growing 28 percent a year for the last several years, China’s high-speed rail network will handle more passengers by early next year than the 54 million people a month who board domestic flights in the United States.

Li Xiaohung, a shoe factory worker, rides the 430-mile route from Guangzhou home to Changsha once a month to visit her daughter. Ms. Li used to see her daughter just once a year because the trip took a full day. Now she comes back in 2 hours 19 minutes.

Business executives like Zhen Qinan, a founder of the stock market in coastal Shenzhen, ride bullet trains to meetings all over China to avoid airport delays. The trains hurtle along at 186 miles an hour and are smooth, well-lighted, comfortable and almost invariably punctual, if not early. “I did not think it would change so quickly. High-speed trains seemed like a strange thing, but now it’s just part of our lives,” Mr. Zhen said.

China’s high-speed rail system has emerged as an unexpected success story. Economists and transportation experts cite it as one reason for China’s continued economic growth when other emerging economies are faltering. But it has not been without costs — high debt, many people relocated and a deadly accident. The corruption trials this summer of two former senior rail ministry officials have cast an unfavorable light on the bidding process for the rail lines.

The high-speed rail lines have, without a doubt, transformed China, often in unexpected ways.

For example, Chinese workers are now more productive. A paper for the World Bank by three consultants this year found that Chinese cities connected to the high-speed rail network, as more than 100 are already, are likely to experience broad growth in worker productivity. The productivity gains occur when companies find themselves within a couple of hours’ train ride of tens of millions of potential customers, employees and rivals.

“What we see very clearly is a change in the way a lot of companies are doing business,” said Gerald Ollivier, a World Bank senior transport specialist in Beijing.

Productivity gains to the economy appear to be of the same order as the combined economic gains from the usual arguments given for high-speed trains, including time savings for travelers, reduced noise, less air pollution and fuel savings, the World Bank consultants calculated.

Companies are opening research and development centers in more glamorous cities like Beijing and Shenzhen with abundant supplies of young, highly educated workers, and having them take frequent day trips to factories in cities with lower wages and land costs, like Tianjin and Changsha. Businesses are also customizing their products more through frequent meetings with clients in other cities, part of a broader move up the ladder toward higher value-added products.

Li Qingfu, the sales manager at the Changsha Don Lea Ramie Textile Technology Company, an exporter of women’s dresses and blouses, said he used to travel twice a year to Guangzhou, the commercial hub of southeastern China. The journey, similar in distance to traveling from Boston to Washington, required nearly a full day in each direction of winding up and down mountains by train or by car.

He now goes almost every month on the punctual bullet trains, which slice straight through the forested mountains and narrow valleys of southern Hunan province and northern Guangdong province in a little over two hours, traversing long tunnels and elevated concrete viaducts in rapid succession.

“More frequent access to my client base has allowed me to more quickly pick up on fashion changes in color and style. My orders have increased by 50 percent,” he said.

China relocated large numbers of families whose homes lay in the path of the tracks and quickly built new residential and commercial districts around high-speed train stations.

The new districts, typically located in inner suburbs, not downtown areas, have rapidly attracted large numbers of residents, partly because of China’s rapid urbanization. Enough farm families become city dwellers each year to fill New York City, part of a trend visible during a series of visits to the Changsha high-speed train station over the last four years.

When the station opened at the end of 2009 in an inner suburb full of faded state-owned factories, the neighborhood was initially silent. But by 2011, nearly 200 tower cranes could be counted building high-rises during the half-hour drive from downtown Changsha to the high-speed rail station. On a morning last month, only several dozen tower cranes were visible along nearly the same route. But a vibrant new area of apartment towers, commercial office buildings and hotels had opened near the train station.

China’s success may not be easily reproduced in the West, and not just because few places can match China’s pace of urbanization. China has four times the population of the United States, and the great bulk of its people live in the eastern third of the country, an area similar in size to the United States east of the Mississippi.

“Except for Boston to Washington, D.C., we don’t have the corridors” of high population density that China has, said C. William Ibbs, a professor of civil engineering at the University of California, Berkeley.

China’s high-speed rail program has been married to the world’s most ambitious subway construction program, as more than half the world’s large tunneling machines chisel away underneath big Chinese cities. That has meant easy access to high-speed rail stations for huge numbers of people — although the subway line to Changsha’s high-speed train station has been delayed after a deadly tunnel accident, a possible side effect of China’s haste.

New subway lines, rail lines and urban districts are part of China’s heavy dependence on investment-led growth. Despite repeated calls by Chinese leaders for a shift to more consumer-led growth, it shows little sign of changing. China’s new prime minister, Li Keqiang, publicly endorsed further expansion of the 5,900-mile high-speed rail network this summer. He said the country would invest $100 billion a year in its train system for years to come, mainly on high-speed rail.

The Chinese government is already struggling with nearly $500 billion in overall rail debt. Most of it was incurred for the high-speed rail system and financed with bank loans that must be rolled over as often as once a year. Using short-term loans made the financing look less risky on the balance sheets of the state-controlled banking system and held down borrowing costs. But the reliance on short-term credit has left the system vulnerable to any increase in interest rates.

“Even well-performing railways capable of covering their cash running costs and interest on their debt will almost certainly be unable to repay the principal without some long-term financing arrangements,” said a World Bank report last year.

Another impact: air travel. Train ridership has soared partly because China has set fares on high-speed rail lines at a little less than half of comparable airfares and then refrained from raising them. On routes that are four or five years old, prices have stayed the same as blue-collar wages have more than doubled. That has resulted in many workers, as well as business executives, switching to high-speed trains.

Airlines have largely halted service on routes of less than 300 miles when high-speed rail links open. They have reduced service on routes of 300 to 470 miles.

The double-digit annual wage increases give the Chinese enough disposable income that domestic airline traffic has still been growing 10 percent a year. That is the second-fastest growth among the world’s 10 largest domestic aviation markets, after India, which now faces a slowdown as the fall of the rupee has made aviation fuel exorbitantly expensive for air carriers there.

High-speed trains are not only allowing business managers from deep inside China to reach bigger markets. They are also prompting foreign executives to look deeper in China for suppliers as wages surge along the coast.

“We always used to have go down south to Guangzhou to meet with European clients, but now they come up to Changsha more often,” said Hwang Yin, a sales executive at the Changsha Qilu Import and Export Company.

The only drawback: “The high-speed trains are getting very crowded these days.”
                                                   
CHINA2 popup
CHINA2 popup

Hilda Wang contributed reporting.
http://www.nytimes.com/2013/09/24/business/global/high-speed-train-system-is-huge-success-for-china.html?ref=business&_r=1& (http://www.nytimes.com/2013/09/24/business/global/high-speed-train-system-is-huge-success-for-china.html?ref=business&_r=1&)  :icon_study:


Title: Re: Official Chinese Toast Thread: Maybe Not - Other Side of Coin Article?
Post by: RE on September 24, 2013, 11:34:10 PM
Speedy Trains Transform China
                                         
24chinarail span articleLarge
24chinarail span articleLarge


It takes a LOT of electricity to move a train at 186 MPH.

This explains why the Air in China in these High Population Density neighborhoods looks like this:

(http://static.guim.co.uk/sys-images/Guardian/Pix/audio/video/2013/1/31/1359634035173/Chinese-road-in-smog-016.jpg)

Viewed from Space:

(http://img.gawkerassets.com/img/18kx19av6svsagif/original.gif)

The Chinese are...wait for it...

(http://thisisnotalovesong.files.wordpress.com/2007/07/toast.jpg)

RE
Title: Official Chinese Toast Thread:Smog Shuts Down Beijing
Post by: RE on October 07, 2013, 11:55:47 PM
I probably should run a parallel Chinese Toast thread over on the Environment Board, since articles like this one are more Environment than Economic.  However, it all does tie together of course.

Having to shut down a Major City due to SMOG is a pretty extreme problem by any measure.  I can't ever remember even Los Angeles ever being shut down due to Smog.

The Chinese are TOAST.

RE

No Planes, No Trains, And No Automobiles As Record Smog Shuts Beijing
(http://www.zerohedge.com/news/2013-10-07/no-planes-no-trains-and-no-automobiles-record-smog-shuts-beijing)

Submitted by Tyler Durden on 10/07/2013 19:06 -0400

    China

China started re-opening roads and airports in Beijing and surrounding areas that have been shut by record high levels of smog. An estimated 430 million people were expected to travel during the holiday that ends today and with the air quality index "improving" from its highest possible level to below 200 (the line between heavy and medium pollution), some will be able to return home. The clips below are stunning (and no that is not 'fog'); summed up best by one Shanghai-based accountant that Bloomberg reports noted, "I won’t go to heavily polluted places like China’s north region as it’s either hazardous to your health or causes trouble when traveling."

 

Beijing Air Polution Hits Highest

http://www.youtube.com/v/J4XUvUjDMOA?feature=player_embedded

China smog shrouds Beijing and Northern China

http://www.youtube.com/v/woHSSuj9inQ?feature=player_embedded

Via Bloomberg,

    ...

     

    “Beijing will see light rain tonight, which will make it easier for air pollutants to dissipate,” Beijing Meteorological Bureau said today in its official microblog. The bureau lifted a yellow alert on smog at 8:50 a.m., predicting that visibility will improve.

     

    The closures yesterday of six expressways and disruption at Beijing Capital International Airport underscore the severity of pollution that has become the top cause of social unrest in China.

     

    ...

     

    Police closed six expressways linking the capital city to Shanghai, Tianjin and Harbin yesterday, and 47 flights at Beijing Capital International Airport were affected.

     

    Some parts of the expressways linking Beijing to Shanghai and Tianjin were still closed as of 9:40 a.m

     

    ...

     

    The State Council, China’s cabinet, said last month it will cut coal consumption, close steel plants and control the number of cars on its roads to gradually eliminate heavily polluted days in as soon as a decade.

    ...

    China will build a nationwide network within three to five years to monitor the impact of air pollution on health, the official Xinhua News Agency reported on Oct. 5, citing the Chinese Center for Disease Control and Prevention.
Title: Coal Will SAVE the Day!
Post by: RE on October 14, 2013, 11:14:01 PM
On Reuters yesterday.  Didn't these folks read the story the Chinese are going to REDUCE coal consumption and Pollution?

You gotta wonder about the Energy Experts being paid to pitch this stuff out on the MSM.  This one clearly comes from the Coal Shills.

Coal is "Plentiful".  Baloney, High Energy Anthracite Coal is about gone now.  Beyond that, mining the stuff is going to be darn hard in greater quantities without the Oil Powered Heavy Equipment.

(http://img.photobucket.com/albums/v354/Bug_muldoon/20041210_226_grua2.jpg)

Then of course there is the Money Problem...

RE

World Coal Consumption To Surpass Oil By 2020 Due To Rising Demand In China And India (http://www.huffingtonpost.com/2013/10/14/world-coal-consumption-oil_n_4095221.html?ref=topbar)

Reuters  |  Posted: 10/13/2013 11:59 pm EDT
Share on Google+
World Coal Consumption

Follow:
Coal, West Virginia Mine Disaster, World Coal Consumption, China Coal, China Coal Demand, China Coal Use, Coal Consumption, Coal Emissions, Coal Pollution, Global Coal, Global Coal Consumption, Green News


By Florence Tan

DAEGU, South Korea, Oct 14 (Reuters) - Coal will surpass oil as the key fuel for the global economy by 2020 despite government efforts to reduce carbon emissions, energy consultancy firm Wood Mackenzie said on Monday.

Rising demand in China and India will push coal past oil as the two Asian powerhouses will need to rely on the comparatively cheaper fuel to power their economies. Coal demand in the United States, Europe and the rest of Asia will hold steady.

Global coal consumption is expected to rise by 25 percent by the end of the decade to 4,500 million tonnes of oil equivalent, overtaking oil at 4,400 million tonnes, according to Woodmac in a presentation on Monday at the World Energy Congress.

"China's demand for coal will almost single-handedly propel the growth of coal as the dominant global fuel," said William Durbin, president of global markets at Woodmac. "Unlike alternatives, it is plentiful and affordable."

China - already the top consumer - will drive two-thirds of the growth in global coal use this decade. Half of China's power generation capacity to be built between 2012 and 2020 will be coal-fired, said Woodmac.

China has no alternative to coal, with its domestic gas output limited and liquefied natural gas (LNG) imports more costly than coal, Durbin said.

"Renewables cannot provide base load power. This leaves coal as the primary energy source," he said.



ASIA TO FOCUS ON LOW-COST COAL

Power infrastructure provider Alstom estimated that across Asia close to half of the 600 gigawatt of new power generators to be built over the next five years will be coal-fired, Giles Dickson, a vice president at the company said.

"Coal prices are low," he said, adding that coal is about one-third of the price of LNG in Asia and about half of the gas price in Europe.

Abundant supply is also supporting demand for coal. The traded volumes of coal will increase by a further 20 percent by 2020, Dickson said, including supply of lower grade coal from Indonesia, Australia and South Africa.

"As the lower grade coal comes into the market, further downward pressure on prices will further drive demand," he said.

Excess supply and faltering demand growth have depressed global coal prices this year. European coal futures have tumbled more than 20 percent, while Australian coal prices have plummeted from the record $130 per tonne hit in 2011 to around $80 per tonne as China's demand grew slower than expected.

"If you take China and India out of the equation, what is more surprising is that under current regulations, coal demand in the rest of the world will remain at current levels," Durbin said.

High fuel import costs and nuclear issues will support coal use throughout Northeast Asia, while in North America coal is still competitive in many locations despite abundant low-cost shale gas.

"The struggling economy and low coal prices has rendered the European Union (EU) Emissions Trading Scheme (ETS) ineffective," Durbin said. "The carbon price will need to reach 40 euros per tonne to encourage fuel switching, which is unlikely before 2020."

In Southeast Asia, coal will be the biggest winner in the region's energy mix. Coal will generate nearly half of Southeast Asia's electricity by 2035, up from less than a third now, the International Energy Agency said in early October.

This will contribute to a doubling of the region's energy-related carbon dioxide emissions to 2.3 gigatonnes by 2035, according to the IEA. (Additional reporting by Meeyoung Cho and Jane Chung; Editing by Tom Hogue)
Title: Re: Official Chinese Toast Thread
Post by: Surly1 on October 15, 2013, 03:33:35 AM
Guess these people missed the story about China closing cities due to smog. Reads like a Consol or United press release.
Title: Re: Coal Will SAVE the Day!
Post by: jdwheeler42 on October 15, 2013, 05:22:24 AM
On Reuters yesterday.  Didn't these folks read the story the Chinese are going to REDUCE coal consumption and Pollution?
The funny part is, they did....
Quote
Excess supply and faltering demand growth have depressed global coal prices this year. European coal futures have tumbled more than 20 percent, while Australian coal prices have plummeted from the record $130 per tonne hit in 2011 to around $80 per tonne as China's demand grew slower than expected.

"If you take China and India out of the equation, what is more surprising is that under current regulations, coal demand in the rest of the world will remain at current levels," Durbin said.
Quote from: RE
Coal is "Plentiful".  Baloney, High Energy Anthracite Coal is about gone now.  Beyond that, mining the stuff is going to be darn hard in greater quantities without the Oil Powered Heavy Equipment.
Yeah, the amusing part is they report coal in raw tonnage.... I've seen that when you account for energy content (BTUs), peak coal has already been reached.
Title: Chinese Toast
Post by: RE on October 27, 2013, 02:10:14 AM


Off the keyboard of RE



Follow us on Twitter @doomstead666

Friend us on Facebook



Published on the Doomstead Diner on October 27, 2013



toast2



Discuss this article at the Economics Table inside the Diner



One of the longest running contrarian opinions I have spent ungodly hours debating on the net is the concept that the "Chinese Economic Miracle" is a sham, and that rather than ending up as Successors to the Great Amerikan Empire of the 20th Century, in fact they will likely end up with the most brutal problems of the Collapse of Industrial Civilization.  It seems obvious enough to me that the path they have taken over the last 20 years to play "catch up" to the FSoA and Krautland as a Mercantile Powerhouse is unsustainable, but somehow the folks in charge of issuing mega-bucks of debt at the TBTF Banks have not had the same opionion.  China has been the "Big Sink" for all the debt issued here, Hot Money off the Printing Press of Helicopter Ben Bernanke flowing over to China to Invest in new Factories for Widget Production, Ghost Cities, Bridges to Nowhere, High Speed Rail and all the rest, creating a Bubble of such outrageous proportions it makes Sub-Prime here in the FSoA look like GOOD INVESTMENT with SOLID FUNDAMENTALS.  LOL.



Over on Zero Hedge this week, it was reported that China has now surpassed the FSoA as Oil Importer and chief Konsumer of Fossil Fuels, @ 6.3 mpbd to the 6.26 mbpd of the FSoA.  The subtext here is that since China is using MORE Imported Oil now than the FSoA does, they are doing BETTER than we are!  Their Industrial Paradigm is WORKING, while ours is FAILING!




Submitted by Rory Johnson via OilPrice.com,



Last month the world witnessed a paradigm shift: China surpassed the United States as the world’s largest consumer of foreign oil, importing 6.3 million barrels per day compared to the United States’ 6.24 million. This trend is likely to continue and this gap is likely to grow, according to the EIA’s October short-term energy outlook. Wood Mackenzie, a leading global energy consultancy, echoed this prediction, estimating Chinese oil imports will rise to 9.2 million barrels per day (70% of total demand) by 2020.



World Liquid Fuels Consumption



This trend has been driven by a combination of factors. Booming American oil production, slow post-recovery growth, and increasing vehicle efficiency have all served to reduce crude imports. In China, however, continued economic growth has brought with it a growing middle class eager to take to the road. While the automobile market had cooled earlier this year, September saw sales rise by 21%—a trend that is putting increasing strain on China’s infrastructure and air quality in addition to oil demand.



Some of the world’s largest traffic jams are now commonplace in major Chinese cities, and air quality issues have pushed authorities to pursue synthetic natural gas technology to offset the need for coal-fired electricity. Increasing oil consumption will only serve to exacerbate these issues.



Furthermore, the per capita consumption differential between the two countries is still vast, with an average Chinese citizen consuming a mere 2.9 barrels of oil per year compared to an average American who consumes 21.5. This indicates that China’s growing thirst for oil isn’t going to slow down anytime soon.



So what does this shift in oil imports mean?



More than anything else, it is a sign that China will increasingly depend on global markets to satisfy its ever-growing oil demand. This necessitates further engagement with the international system to protect its interests, encouraging a fuller integration with the current liberal order. This will have effects on both China’s approach to its currency and its diplomatic demeanour.



Derek Scissors wrote last week that this shift might usher in a world where oil is priced in RMB as opposed to solely in USD. This transition could only occur, however, if the RMB was made fully convertible and Beijing steps back from its current policy of exchange rate manipulation. Earlier this year, HSBC predicted that the RMB would be fully convertible by 2017, a reality that is surely hastened by its position as the single largest purchaser of foreign oil. A fully convertible RMB would be a “key step in pushing it as a reserve currency and enhancing its use in global trade, said Sacha Tihanyi, a strategist at Scotia Capital.



On the diplomatic side, while the United States is unlikely to withdraw from its role as defender of global oil production or guarantor of shipping routes, an increasing reliance on foreign oil will push Beijing toward a more engaged role within the international community. It is likely that we will see a change in Beijing’s approach to international intervention and future participation in multilateral counterterrorism initiatives—anything to ensure global stability. In the future, anything that destabilizes the oil market will increasingly harm China more than the United States. While Beijing views this increased import reliance as a strategic weakness, it a boon for those hoping to see Beijing grow into its role as a global leader.



Bottom line: as Chinese oil imports grow, Beijing will become increasingly reliant on the current market-oriented global system—this is nothing but good news for those that enjoy the status quo.




Why is increasing consumption of a non-renewable resource viewed as a GOOD THING?  In all reality, this is a BAD THING, because obviously when the resource you depend on RUNS OUT or gets TOO EXPENSIVE, your whole paradigm is shot to hell.  In the mind of the Economista though, Increasing Consumption is GOOD!  It means Increasing GDP!  In the pathway from Production (really Extraction) of Resource to its consumption, the Intermediaries along the way sieve off their "Profits".  This is how people get RICH!  They insert themselves somewhere in the chain which goes from the Extraction of the Resource to its Consumption and production of Waste and take a piece of the downhill energy flow.  The more WASTED at the bottom of the Pyramid, the RICHER the folks at the top of the Pyramid get.



To the people who run this show, China looked just GREAT!  1.3B potential Konsumers of Energy they could leverage on to still GREATER heights of Unimaginable Wealth!  Long as those Chinamen are continuing to Increase in their Energy Konsumption, somebodies in the Middle of the flow are getting very, VERY rich!  If you are in there as a BENEFICIARY of this waste based system, the LAST thing you want is for it to STOP!  So China Bulls promote the Asian Economies as the Next Great Place to GET RICH, investing in the further build out of the energy intensive economy in this locale.



What is the PROBLEM here?  The problem is the ENERGY increasing Production out of the Chinese Economy is becoming increasingly scarce and increasingly EXPENSIVE to extract with each passing day.  On the Graphs produced of EXPECTATIONS, it looks like those Industrious Chinamen are gonna continue to BUY & BURN more energy than we can, so THIS is the place to Invest your Money!  Can they REALLY continue on this Up Slope all that much longer though?  When you peruse the latest RESULTS of this last ditch effort into Industrial Manufacturing on the Grand Scale, you see the small problem of ENVIRONMENTAL CATASTROPHE!  Every day now another entire Chinese CITY gets shut down due to overwhelming SMOG!  This is not bombast coming from the Blogosphere, it is straight off the pages of CNN and the rest of the MSM:



A woman wearing a mask walks along a road as smog engulfs Harbin, China, on Tuesday, October 22. Expressways, schools and an airport were closed after smog disrupted one of northeast China's most heavily populated areas.




(CNN) — Schools, major roads and an airport remained closed Tuesday, as a thick cloud of filthy smog smothered the northeastern city of Harbin.



Meteorologists in the city, which is famous for its annual ice festival, issued a red alert for fog at 5 a.m. Tuesday, with visibility in some central areas of the city down to less than 20 meters (65 feet), the state-run Xinhua news agency reported.



Video from China's state-run CCTV showed some people — obscured by smog even just steps away — wearing masks over their mouths as they walked in the province. Some drivers who braved the roads flashed hazard lights.



Kindergartens, primary and junior middle schools were ordered to suspend classes for a second day, while Harbin Taiping International Airport remained closed — with 250 flights canceled on Monday alone, according to Chinese state media.



China needs smog-free air in a can



Hazardous levels






China's toxic smog problem





Thick smog blankets city, closes schools





On China: China's role in climate change


Pollution levels remained far above international standards, as the city's monitoring stations on Tuesday showed that concentrations of PM2.5 — the tiny airborne particles considered most harmful to health — were more than 30 times the World Health Organization's recommended standard, the state-run China Daily reported.



Could smog choke China's sporting ambitions?



Government officials blamed the smog on a lack of wind and farmers burning crop stalk after their autumn harvest, though the city's coal-burning heating system, which was recently started, is also a likely factor. Harbin's environmental bureau has also conducted checks on factories known to discharge pollutants, the China Daily report added.



Extreme conditions



Fang Lijuan, the city's chief meteorologist, said it was very rare for the city to suffer such extreme conditions.



"There has been no strong wind and the level of humidity is high," she said, in quotes carried by China Daily.



Residents of this city of 10 million people were also surprised by the thick smog.



Living with an 'air-pocalypse'



"The pollution is indeed very bad, we can only see things within 100 meters, and yesterday it was 20-30 meters. We can smell the smoke in the air," one man, who identified himself as Mr. Ren, told CNN.



"The smog started about four days ago … I heard all face masks in Harbin are sold out. People are very angry about this and there is a lot of discussion over the Internet.



"The main reason is Harbin started its heating and the main resource is coal. Every year at this time, the air quality is bad — but this year is especially polluted."



Can social media clear air over China?



Naming and shaming



Last month China announced plans to start listing its top ten most air-polluted cities every month in the hopes that national humiliation will push positive environmental action.



"We must put air quality control as an ecological red line for economic management and social development," China's Vice Premier Zhang Gao Li said in a statement as he announced the new policy at the 18th Air Pollution Control Conference in Beijing.



Chinese officials did not say when the first list would be announced, but the northern megacities of Beijing and Tianjin, as well as the surrounding provinces of Hebei, Shanxi, Inner Mongolia and Shandong have signed onto an official plan to speed up air pollution control measures.



China's capital often suffers with hazardous pollution levels and smog. An explosion in the number of cars on the roads, as well as industrial pollution are seen as the main contributors.



What Beijing looks like on a gloriously clear day




A policeman directs Harbin traffic on Monday, October 21. In some central areas of the city, visibility was less than 20 meters (65 feet).



This is a sustainable paradigm?  GIMMEE A BREAK!  These folks got an Overshoot problem in Population non-pareil in absolute numbers, virtually ZERO Energy Resources of their own to mine up, depleted land for farming AND internal debt on Ghost Cities and Bridges to Nowhere too!  The main ASSET the Chinese hold is a ton of IRREDEEMABLE DEBT issued over here by our Treasury Department.



Now, here is the REAL question to ask yourself.  HTF is it that the "Richest" country in the world in say 1990 (ostensibly the FSoA) was able to borrow $Trillions$ from an impoverished COMMUNIST nation that at the time had pretty much ZIPPO in the way of Industrial Infrastructure?  Where were the Chinese getting money to LOAN to the FSoA?  Answer:  They didn't HAVE it until we BORROWED it.  Then they created the money to loan out!  This is just a bigger version of the same scam your local Bank does when it Loans you money on a Mortgage to buy a McMansion.  AFTER you borrow the money at the current Interest rate charged for retail loans, the Bank then uses this asset to Borrow the money at a lower interest rate (nowadays ZERO) from Da Federal Reserve, who creates the money based on this new "Asset" on the Loan Book of the Bank who issued the loan out.



Of course it is a good deal more complicated than this with Securitization of Mortgages, Rehypothecation etc, but this is the essence of how this Money Creation Game works.  So the Chinese become this ENORMOUS Lender, based on nothing really other than the fact it is a big country with lots of people in it.  Investment money flows toward China from the Private Sector to build up the Industrial Infrastructure that will produce toys that Amerikans will buy on…yes still MORE Credit!  This time a lot of it UNSECURED credit in terms of Credit Cards, but also HELOC loans based on a perceived Asset Value of McMansions that itself was all based on the further issuance of Credit.



The Finance and Economics industry has all sorts of neat names for this, "Animal Spirits", "Bull Markets" etc, but basically it's self-replicating FRENZY that develops when there are lots of Resources to exploit around, and the people in charge of Credit Creation set up the game to get outrageously RICH on the Spreads and Management Fees involved in pushing out all this Credit.  All the laws are written to favor the Creditors, so even in a Bust situation they usually figure to come out OK.  They just Repo the Assets for Pennies on the dollar, leave the Debtors completely Impoverished and then Reboot.



At least that it how it worked up to this iteration of the cycle, but this time really IS DIFFERENT.  On this occassion, the Frenzy of Animal Spirits in the Bull Market basically exhausted the supplies of Cheap, EZ to Access Fossil Fuels that run the Industrial Economy, and most if not all of the Physical Assets created using this energy source such as Carz, McMansions and Factories are basically WORTHLESS in the absence of MORE Cheap Energy.  You CAN repo them, but their Liabilities are greater than their TRUE Value, which is ZERO.  You cannot repo at ALL the Oil burned up in the production of these now worthless assets, it is all floating around in the atmosphere now as molecules of CO2.



Which brings us back to Chinese Toast.



First, the idea that China's energy consumption and importation of Oil will continue to Increase here for any great length of time is preposterous.  Total Oil production has plateaued here, and all the major fields providing relatively Cheap Oil are declining in productivity.  More and more countries who were net Oil Exporters are flipping over to being Oil Importers, if they can get Credit for that of course.



http://dlb8685.files.wordpress.com/2010/06/world-oil-production-2002-2008.gif



Second, all the countries which BUY Chinese products have hit a Debt Saturation point, and demand is falling across the board for just about everything except food, which is relatively inelastic.  The Chinese environment overall these days for doing food production is deteriorating, so it is unlikely they can become Food Exporters.



Third, EVERYBODY KNOWS China has a massive Bubble in Real Estate, with Hong Kong PARKING SPOTS retailing out at like $200K.  Ghost Cities, Bridges to Nowhere and a Pollution Problem so bad they have to shut down a City a Week these days as the Smog rolls in.



In their own way the Chinese appear to see the problem, and are Prepping Up by trying to buy up tons of Gold, Farmland in Africa and Coal Mines in Oz.  It remains to be seen whether they can keep shipping food OUT of Africa to China when local Africans are STARVING.  Whether the tons of Gold they are importing NOW will buy what is left of MENA Oil in 5 years is also an open question.  Do Saudi Sheiks really need any more Gold?  If the Saudi PEOPLE are starving, how long do the Sheiks maintain enough control to ship out any remaining Oil?



If the Chinese do go ahead and try to wholesale dump USTs, it will send the whole House of Cards down.  They'll never really be able to back Renminby with Gold, because anybody holding Renminby will want to convert it to Gold.  If they don't allow the conversion to Gold, then RMBY is NOT really "backed" by Gold.  So the Chinese will play along here as long as they can, and the charade continues a while longer until there is some real hard stop in actual supply chains.  Most likely to occur resultant from escalating War in MENA, but other possibilities exist as well.



On an economic level, when the price of production exceeds the price the customers can pay, this is what will  force the shut-down of high priced "tight oil" production facilities, which is what keeps us plateaued here rather than seeing a large drop in total world Oil production.  Steve on Economic Undertow refers to this as the "Triangle of Doom", and the trend lines appear to converge around the end of 2014.



http://www.economic-undertow.com/wp-content/uploads/2013/08/Triangle-of-Doom-080113.png



Rock, Meet Hard Place here.  Far as the Chinese are concerned, this is the point at which they could not continue to Increase Consumption of Energy even if they wanted to.  The customers  won't have money to buy it in greater quantities, and the Oil Extractors won't be pulling so much out of the ground.  Even a forced Credit Expansion by the PBoC won't work, since Gold or no Gold in the basement safe of the PBoC, issuing out credit to buy what is not there to buy just devalues the credit.



It remains to be seen how real contraction of available energy affects the various Nations currently dependent on increasing consumption for nominal Growth in their respective GDPs.  There will no doubt be demand destruction across the board here, which will make the Pricing extremely volatile.  Forced conservation efforts may be undertaken also, and more peripheral countries triaged off the Credit Bandwagon also, leaving those countries still with access to credit to comepte with each other for the remaining supplies.  However, you cannot get round the fact that less energy will be available here, because there simply are no sources of CHEAP energy, and that is what the Waste Based system has as its underpinning.



If Energy had been priced correctly from the beginning of the Industrial Revolution in terms of the Work it was capable of doing and the Finite Limitations of its availability, the structures we created in the intervening time would never have been built.  The Eisenhower Interstate, the vast and spread out living arrangements of McMansions dependent on Automobiles, the long Supply Chains moving products 1000s of miles every day around the Globe…all of this was based on Mispricing Energy.



http://www.scdigest.com/images/Historical_Oil_Prices.jpg



The above chart updates the one I posted in my last couple of articles by showing pricing through history in 2010 dollars, which gives you a better idea of the volatility during periods when Oil supply is not a sure thing.  In those early years while Standard Oil was being consolidated as a Monopoly by John D. Rockefeller, the price of Oil was even more volatile than it is now.  You can see the spikes which occurred through the period when various political events put a crimp in the supply chain of delivery from Well to Refinery,  but overall until the Yom Kippur War the price of Oil and the availability of credit to buy it stayed LOW, and building out the system based on ever more extraction was possible.  The volatility we see in the aftermath of that shows that the perpetual increasing production could not be maintained, and ever more expensive Oil has had to be sourced since then.  If credit gets issued on FUTURE production, it gets defaulted on, because the price increases faster than the customers ability to purchase it does.  On a gross level, the system is no longer GROWING, it is CONTRACTING.  The numbers get masked by wacky accounting fraud gimmicks, but the results are quite obvious. More Biz goes BK, more homes foreclosed on, more Nation States unable to collect sufficient Taxes to support their systems.



The Chinese are really at the Leading Edge of this problem, regardless of what current economic indicators purport to show.  They have one of the worst problems in Population Overshoot, real Resource Depletion issues with Water and Arable Land, dependence on Energy and Food Imports, horrible Pollution issues and a mercantilist economy quickly running OUT of customers to sell to.  Heaps of UST paper and Mountains of Gold cannot save the Chinese.  They are TOAST.



RE


Title: Re: Chinese Toast
Post by: nobody on October 27, 2013, 06:02:19 AM
You see, RE you have a way of writing about economics that is broad.  Maybe Elvis just wants to feature the less accessible variety; the more 'elite' forays into the economic stratosphere, while you're the everyman kind of writer; your meaning descending down and cutting through the smog surrounding confused persons like me.  The art of the Chinese toasters of the 50's chronicled the way you do to end up with the Chinese becoming toast is like a signature of yours too and perhaps this personal touch (humor?) is not favored on such dry sites as zh  ..a site for serious persons who have no wish to snort coffee through their nose, just before heading out to the cubicle.  I'm still wondering as well why Kunstler hasn't podded you except that maybe your flagship site here is relatively new.

Do you know much about the Chinese gov't?  I don't of course, save that it's a very different system and yet we find ourselves in similar boat.  Because the real system is above and beyond gov't.
RE "Heaps of UST paper and Mountains of Gold cannot save the Chinese.  They are TOAST."
And of course, so are we.  You're speaking here to the folks who think they maybe are not toast.  How anyone can think that anyone is safe or safer -is what i can't figure out. 
Title: Re: Chinese Toast
Post by: Mister Roboto on October 27, 2013, 07:09:44 AM
One thing that bears pointing out is that China is the industrial equivalent of a banana republic.  A huge chunk of their factories are owned by foreign companies.
Title: Re: Chinese Toast
Post by: jdwheeler42 on October 27, 2013, 10:39:11 AM
RE "Heaps of UST paper and Mountains of Gold cannot save the Chinese.  They are TOAST."
And of course, so are we.  You're speaking here to the folks who think they maybe are not toast.  How anyone can think that anyone is safe or safer -is what i can't figure out.
It's simple -- there's toast, and then there's TOAST!

Let me give you an analogy by way of a story.  I had a friend who lived in Mississippi.  Then he moved to Arizona.  He tried to sell his house in Mississippi for months and months, but he got no interest.  Then Katrina came.  A tree fell on his garage.  He had the house sold within the week.  Why?  Because every other house in the neighborhood was completely demolished.  So, a house that just had a tree through the garage roof looked pretty good in comparison.

That's the thing about large-scale disasters, especially natural ones.  They may not leave anyone unscathed, but the amount of devastation can vary widely, even over short distances.  You can prepare to a certain extent, but to a large extent it depends on plain, dumb luck.  Man-made disasters are a little more amenable to preparation, but even then there is the question of a disaster happening to be one you've prepared for, when you're prepared for it.  A fallout shelter in your backyard won't do you much good if you're at a funeral in another state when a nuclear explosion occurs.
Title: Re: Chinese Toast
Post by: Eddie on October 27, 2013, 11:02:28 AM
"May you live in interesting times."

                    ------ Ancient Chinese Curse


Great article. I can't see why Zero Hedge wouldn't repost it.
Title: Re: Chinese Toast
Post by: RE on October 27, 2013, 02:31:00 PM
"May you live in interesting times."

                    ------ Ancient Chinese Curse


Great article. I can't see why Zero Hedge wouldn't repost it.

3 reasons I think.

1- Gonzo Style
2- Anti-Gold Spin
3- Anti-Capitalist subtext

RE
Title: Re: Chinese Toast
Post by: RE on October 27, 2013, 02:43:38 PM
You see, RE you have a way of writing about economics that is broad.  Maybe Elvis just wants to feature the less accessible variety; the more 'elite' forays into the economic stratosphere, while you're the everyman kind of writer; your meaning descending down and cutting through the smog surrounding confused persons like me.  The art of the Chinese toasters of the 50's chronicled the way you do to end up with the Chinese becoming toast is like a signature of yours too and perhaps this personal touch (humor?) is not favored on such dry sites as zh  ..a site for serious persons who have no wish to snort coffee through their nose, just before heading out to the cubicle.  I'm still wondering as well why Kunstler hasn't podded you except that maybe your flagship site here is relatively new.

Do you know much about the Chinese gov't?  I don't of course, save that it's a very different system and yet we find ourselves in similar boat.  Because the real system is above and beyond gov't.
RE "Heaps of UST paper and Mountains of Gold cannot save the Chinese.  They are TOAST."
And of course, so are we.  You're speaking here to the folks who think they maybe are not toast.  How anyone can think that anyone is safe or safer -is what i can't figure out.


Actually, the Toaster featured in all my Chinese Toast posting was probably manufactured in the FSoA during the heyday of manufacturing here BEFORE it all got shipped over to China.

Thankfully so, because moving all the factories over THERE is why they have the huge cloud of SMOG over them and we don't.

(http://static1.businessinsider.com/image/50f57624eab8eaee27000002-960/china_tmo_2013014.jpg)

Why are we less Toast than China?  Lower Population, Less Pollution, better Water supply, more arable land.

Of course, if the Nukes here all go Fuk-U-shima, these current advantages will be lost, but as of today we are doing better.

Easy way to determine who is doing better or worse is to ask yourself whether you would rather be living in China or here?  Granted it sucks here, but it sucks less than China.  Where I live sucks a LOT less.

RE
Title: Re: Chinese Toast
Post by: JoeP on October 27, 2013, 02:46:25 PM
"May you live in interesting times."

                    ------ Ancient Chinese Curse


Great article. I can't see why Zero Hedge wouldn't repost it.

3 reasons I think.

1- Gonzo Style
2- Anti-Gold Spin
3- Anti-Capitalist subtext

RE

Yup, I doubt it will pass the Durdenz Review Board.  As Eddie pointed out, it is a great article.  :icon_sunny:
So forget the Durdenz.
 
Title: Re: Chinese Toast
Post by: Surly1 on October 27, 2013, 02:49:05 PM
"May you live in interesting times."

                    ------ Ancient Chinese Curse


Great article. I can't see why Zero Hedge wouldn't repost it.

3 reasons I think.

1- Gonzo Style
2- Anti-Gold Spin
3- Anti-Capitalist subtext

RE

Yup, I doubt it will pass the Durdenz Review Board.  As Eddie pointed out, it is a great article.  :icon_sunny:
So forget the Durdenz.

Hear, hear.

FWIW, it was one of your better.
Title: Re: Chinese Toast
Post by: RE on October 27, 2013, 02:56:15 PM
"May you live in interesting times."

                    ------ Ancient Chinese Curse


Great article. I can't see why Zero Hedge wouldn't repost it.

3 reasons I think.

1- Gonzo Style
2- Anti-Gold Spin
3- Anti-Capitalist subtext

RE

Yup, I doubt it will pass the Durdenz Review Board.  As Eddie pointed out, it is a great article.  :icon_sunny:
So forget the Durdenz.

At least Jimbo reposted it on TBP.  :icon_sunny:

RE
Title: Re: Chinese Toast
Post by: steve from virginia on October 27, 2013, 03:03:46 PM
@RE:

Quote
HTF is it that the “Richest” country in the world in say 1990 (ostensibly the FSoA) was able to borrow $Trillions$ from an impoverished COMMUNIST nation that at the time had pretty much ZIPPO in the way of Industrial Infrastructure?  Where were the Chinese getting money to LOAN to the FSoA?  Answer:  They didn’t HAVE it until we BORROWED it.  Then they created the money to loan out!  This is just a bigger version of the same scam your local Bank does when it Loans you money on a Mortgage to buy a McMansion.

The lending flow is remarkably simple, there are two components:

 1) The dollar-loan component,

 2) The RMB component. Both are very simple; as JK Galbraith once said, "The mind recoils".


This carry trade is why there is so little investment in the US as the rate differential is an incentive to invest overseas, including in China.

The RMB component is even simpler. When a Chinese company sells its products it is left with dollars, in some instances tens of billions of them. The company can do two things with these dollars: a) swap them to the Central Bank (PBoC) or, b) sell them on the black market.

 

This is the explanation for China's remarkable growth rate, it is simply a measure of their sales of dollars overseas.


Problems with China include changes in F/X rate w/ USD, as these have been highly inflationary. For instance, if the RMB/USD rate is 20/dollar instead of 6.6 the outcome is 3x the 'official' rate of inflation.

End of monetary easing in the US will draw out investment dollars as carry trade unwinds.

Title: Re: Chinese Toast
Post by: RE on October 27, 2013, 03:12:12 PM
@RE:

Quote
HTF is it that the “Richest” country in the world in say 1990 (ostensibly the FSoA) was able to borrow $Trillions$ from an impoverished COMMUNIST nation that at the time had pretty much ZIPPO in the way of Industrial Infrastructure?  Where were the Chinese getting money to LOAN to the FSoA?  Answer:  They didn’t HAVE it until we BORROWED it.  Then they created the money to loan out!  This is just a bigger version of the same scam your local Bank does when it Loans you money on a Mortgage to buy a McMansion.

The lending flow is remarkably simple, there are two components:

 1) The dollar-loan component,

 2) The RMB component. Both are very simple; as JK Galbraith once said, "The mind recoils".

Recoils indeed, though it's not simple to most people to grasp this insanity.  You definitely have a more detailed understanding of it than I, I just get what is going on in the Big Picture.  Always do appreciate your dropping in for clarification of the details.  :icon_sunny:

RE
Title: Re: Chinese Toast
Post by: Petty Tyrant on October 27, 2013, 03:41:36 PM
heres something I dont understand. I moved from the west where the big boom economy was all from shipping iron ore and gold to china to the east where what economy isnt propped up by the west is based on shipping loads of coal to china. I see these 2 trailer semi trucks loaded with coal running up and down between the mine and the port.

I see the price of timber and steel going up and its easy to see its the energy/fuel involved in the production and shipping that causes that. But when I think about these semi trucks of coal, unless the coal itself is sold for next to nothing it should be prohibitively expensive.

Diesel @ 1.65$/litre (4$/gallon) ,
 250km (140mi) EACH WAY mine to port, 500km round trip
mileage of 3km/l for a 2 trailer semi truck hauling about 50 ton.
 = roughly 350$ each load.

That is not even factoring in the drivers wages, the mines wages, the machines at the mine fuel and wear, the shipping to china, and the trucking or train in china to the power station. Im going to take a stab and estimate that for 50 tons of coal it costs at least 1000$ and that is not even looking at how much the coal is sold for if the chinese do not own the mine. If it cost say 10$/ton that would take the price to 1500$ for the 50 tons.

How far does 50 tons of coal go in power generation? I have no idea. I just think this idea of having 200 years of coal in the La Trobe valley alone, and this being "cheap" energy is not what it seems. maybe the coal itself is throwaway but with all the diesel involved in digging it up and moving it around the world?
Title: Re: Chinese Toast
Post by: steve from virginia on October 27, 2013, 04:00:25 PM
RE, most ECONOMISTS don't understand the cash flow regime between China and its trading partners. They (Krugman) have China as a creditor when it is instead a sink for excess credit as you astutely observed. China cannot 'print' dollars or issue dollar-debt. Its own currency is nonconvertible overseas = China is a massive borrower of foreign currencies.

The Chinese don't understand, they have to repatriate these currencies, they cannot simply hold onto them.

A problem for China is the slowing flow of dollars to China as their labor price advantage erodes. China is a mercantile state, as such it slowly bankrupts its customers. When broke, these customers cannot buy, they cannot borrow and cash flow to the mercantile state reverses. This reversal is underway in (mercantile) Japan right now.

At some point selling dollars will no longer create GDP for China as losses elsewhere within China will be greater than what is earned by way of the dollar sales. Yet, it will have to sell dollars b/c it will have nothing else!

That day is coming soon ... Sorry Mike Pettis.

Title: Chinese Toast: 16 Tons
Post by: RE on October 27, 2013, 04:05:11 PM

How far does 50 tons of coal go in power generation? I have no idea. I just think this idea of having 200 years of coal in the La Trobe valley alone, and this being "cheap" energy is not what it seems. maybe the coal itself is throwaway but with all the diesel involved in digging it up and moving it around the world?

Indeed, the problem is one of moving the energy containing stuff from where it gets dug up to where it gets burned.

In the early years, Railroads got built to move the coal around, and the railroads themselves were powered by Coal.

Now at many mines, they depend on Diesel powered Trucks to move out the Coal, not to mention dig it up to begin with.

(http://cescientist.com/wp-content-ce/uploads/2013/05/Bagger2883_thumb.png)

So essentially, when the Diesel becomes unavailable or too expensive, all these mines are basically outta biz.  Unless they build Railroad Spurs and new Steam locomotives powered by Coal to drag it out of there, it stays where it lays.

They would also have to transition back from huge Strip Mining operations to lots of Coal Miners hacking out 16 Tons a day with a Pick Axe.

http://www.youtube.com/v/Joo90ZWrUkU?feature=player_detailpage

RE
Title: Re: Chinese Toast
Post by: steve from virginia on October 27, 2013, 05:27:36 PM

Timely article by Ambrose Evans-Pritchard regarding dollar- and other forex loans to China:

http://www.telegraph.co.uk/finance/china-business/10407625/BIS-sees-risk-of-1998-style-Asian-crisis-as-Chinese-dollar-debt-soars.html (http://www.telegraph.co.uk/finance/china-business/10407625/BIS-sees-risk-of-1998-style-Asian-crisis-as-Chinese-dollar-debt-soars.html)

Quote

“Dollar and foreign currency loans have been growing very rapidly,” said the Bank for International Settlements in a new report.

“They have more than tripled in four years, rising from $270 billion to a conservatively estimated $880 billion in March 2013. Foreign currency credit may give rise to substantial financial stability risks associated with dollar funding,” it said. China’s reserve body SAFE said 81pc of foreign debt under its supervision is in dollars, 6pc in euros, and 6pc in yen.

The BIS said loose money policies by Western central banks since the Lehman crisis had cut the cost of foreign funding in East Asia, tempting firms to borrow heavily in dollars. The risk is that this process could go into reverse as the US Federal Reserve shuts the spigot, triggering off a dollar liquidity shortage across the region with even bigger knock-on effects than during the East Asian crisis in 1997-1998.

The US assumption is that the Fed will never shut the credit spigot but the Fed has little control over longer duration securities and its own actions are risks that must be 'priced in'. The rise in yields on US debt would have the same effect as a credit slowdown.

Flows of cheap euros and Swiss francs in the mid-2000s had a similar credit effect in Eastern Europe. After vast sums were lent for mortgages and business loans, the ability to repay evaporated along with ebbing euro- and franc flows.
Title: Re: CHINA CRASHING!!!
Post by: alan2102 on November 02, 2013, 07:23:24 PM
Shaudenfreude Time!  Boy, it sure is great to be proved correct after all these years of hammering on this one.  :icon_mrgreen:
From ZH, and KATY BAR THE DOOR!
SHORT THE PHONE BOOK!

RE
China Crashing: Shanghai Composite Tumbles Most Since 2009 (http://www.zerohedge.com/news/2013-06-24/china-crashing-shanghai-composite-tumbles-most-2009)
Submitted by Tyler Durden on 06/24/2013 02:51

Woohooooo! Yes!  Proved correct, after all these years!

Shanghai Composite crashing!  China going down the tubes! This is IT,
friends! The Big One!  Sino-Meltdown, and NOTHING can stop it!

........................

Errr, waitasec. That was four months ago. Where's the Shanghai Composite today?
vis:  https://www.google.com/finance?cid=7521596 (https://www.google.com/finance?cid=7521596)

Hmmm.

Well, there's always hope for 2014.

Yeah, that's it: China WILL CRASH HARD IN 2014, AND NEVER NEVER EVER RECOVER!

BELIEVE IT!  MARK MY WORDS!


Title: Re: CHINA CRASHING!!!
Post by: RE on November 02, 2013, 07:50:04 PM

Errr, waitasec. That was four months ago. Where's the Shanghai Composite today?
vis:  https://www.google.com/finance?cid=7521596 (https://www.google.com/finance?cid=7521596)

DOW also reaching New Highs!

The MAGIC of QE!  Market Levitation 4EVER!

What goes UP, must come DOWN.  Gravity is a BITCH.

Think of the Chinese as the Social Equivalent of the Balloon Phase on the Way UP for Felix Baumgartner.

(http://l3.yimg.com/bt/api/res/1.2/ivY1kq_3Cijk0BFipnIDxg--/YXBwaWQ9eW5ld3M7cT04NTt3PTYzMA--/http://media.zenfs.com/en/blogs/thelookout/felix-baumgartner-lg.jpg)

The Chinese are gonna get Baumgartnered here eventually.

You CANNOT Make SOMETHING from NOTHING.

RE
Title: Re: Official Chinese Toast Thread
Post by: RE on November 24, 2013, 11:33:39 PM
These folks are NUTS.

RE

China’s Sweeping Free Market Reforms. Consolidating the Cheap Labor Economy, Devastating Social Impacts (http://www.globalresearch.ca/chinas-sweeping-free-market-reforms-consolidating-the-cheap-labor-economy-devastating-social-impacts/5359207)

In what is being promoted as the most sweeping pro-market reform drive in three decades, the Chinese Communist Party (CCP) has unveiled the main resolution and President Xi Jinping’s explanatory remarks to the third plenum of the 18th Central Committee that concluded last week.

The global financial markets regarded the initial communiqué released on November 15 as disappointing due to the lack of any concrete policy. Stock markets in mainland China and Hong Kong tumbled the next morning. “Then, on the weekend, well ahead of the usual schedule for such announcements”, the New York-based Bloomberg.com noted, “the party released a longer follow-up statement worth getting excited about,” adding that, “It’s radical stuff”.

The market excitement was summed up by American billionaire investor, Jim Rogers, cofounder of the Quantum Fund with Gorge Soros. He announced he was considering migrating to China with his dollars, as “the most important economic event of the next 10 to 20 years is what happened in Beijing.”

The “Decision on Major Issues Concerning Comprehensively Deepening Reforms” is a 60-point blueprint for the next 10 years. It stressed that “the reform of the economic system is the focus of all the efforts to deepen the all-round reform”, which will allow the market to play the “decisive” role in economic life. Some sections of the Chinese press even predicted that the state would be reduced to the status of “night watchman”—a phrase used to describe 19th century “laissez-faire” capitalism of Dickensian Britain.

The blueprint is in line with the demands of Western finance capital outlined in a joint report produced last year by China’s State Council and the World Bank, China 2030. The aim is to intensify the exploitation of the 500-million strong Chinese workforce through production speedup, streamlining and opening up the sections of the Chinese economy previously closed to global capital. It will create greater supplies of cheap labour through sweeping land reform to drive more peasants into the cities, the loosening of the “One Child” policy to boost population growth and a possible increase in the retirement age.

Central to the proposals is financial sector liberalisation that will allow private capital to set up small and medium banks, as well as further moves toward exchange rate flexibility and market-determined interest rates. The ultimate aim is to make the tightly controlled capital account freely convertible. A deposit insurance scheme will be established that will effectively allow financial institutions to go bankrupt, but protect investors. The “Big Four” state-owned commercial banks are poised to become big losers as their current dominant position will be significantly eroded.

Previously state-dominated sectors including finance, petrochemicals, aviation, coal, shipping, electricity and even military industries will be opened up to private and foreign investors. Moreover, the resolution calls for a “hybrid ownership structure” that mixes state, private and other forms of ownership. It will transform state assets into what it calls “state capital” that will invest in enterprises in a similar fashion to various sovereign funds in the global stock markets. Several state asset management companies will be set up for that purpose.

Although the plenum resolution stressed the state will continue to control strategic sectors related to national security, state-ownership will be more like a giant-managed fund exercising influence mainly through majority share-holding, rather than direct administrative control. Corporate executives, rather than party bureaucrats, will be appointed to run these companies which will be accountable to shareholders and the board, not party authorities.

There is no sign, however, that Beijing will fully privatise the 100-plus largest state-owned enterprises amid concerns about national security raised by the US “pivot to Asia”. The revelations of former NSA contractor Edward Snowden that US tech companies have assisted US agencies to gain access to telecom networks have triggered alarm bells in Chinese security circles. Beijing has begun to exclude American corporations such as Cisco and IBM, leading to sharp falls of their recent revenues, and use Chinese companies instead.

Chinese media has highlighted the new austerity that Xi has imposed on the CCP bureaucracy with bans on drinking, fine dining and luxury offices, supposedly to end endemic corruption. In reality, these measures are to discipline and downsize the large state bureaucracy, turning it into a “service” government subordinate to the new Chinese elite and the operations of the “free market”.

The government will also deregulate much of the pricing for oil, gas, power, water, transport and telecommunications inevitably leading to higher living costs for the working people, who are already under severe financial strain. As much as 30 percent of the profits of state enterprises will be used to finance “social security”, up from 15 percent at present. The real motive behind this decision is to lessen taxation on private sector firms and further cut the already low levels of state spending on pensions and health care.

Last year China recorded the first decline in its working age population (16-59) in recent decades. In a bid to boost birth rates, the new proposals will loosen the “One Child” policy for the first time since it was enacted in 1979. Couples will be allowed to have two children, if one of the parents was a single child.

The proposed land reform, supposedly to give farmers the right to sell their land, is aimed at driving millions of rural poor into the cities as cheap labour. A market in urban land has existed since the 1990s. But rural land, though no longer farmed collectively since the 1980s, is still collectively owned by farmers at least nominally. In practice, it is controlled by village and township CCP bosses, whose collusion with developers and corrupt practices have often provoked violent protests and clashes.

Now farmers will be allowed to sell their land. In a related decision, the household registration system will be dismantled, ending the formal ban on rural residents living in the cities. The influx of rural labour will vastly heighten the pressure on jobs and social services in the urban areas. Officially, 51 percent of China’s population now lives in the cities, up from 18 percent in 1978. In reality, 270 million “urban” residents, almost of 40 percent of total, still have their household registration in rural areas, and are not entitled to social services in the cities.

The CCP regime is deeply concerned about the prospect of social unrest. Xi announced several cosmetic changes, including the abolition of the widely hated “correction through labour” system which allows police to send minor offenders to labour camps for up to four years without due procedure. In reality, Xi is strengthening the police state apparatus with the establishment of a new powerful National Security Committee that places the military, intelligence, public security and diplomatic apparatus under his direct control.

Xi is being compared to Deng Xiaoping who initiated the process of restoring capitalism in 1978. Professor Xiao Gongqian of Shanghai Normal University summed up the enthusiasm in ruling circles for “a golden age of Chinese neo-authoritarianism” to protect the interests of the wealthy elites as the social divide deepens. “It’s essential to concentrate power now. This period requires a strong man, a very powerful leader, and this powerful leader must have both prestige and also institutionally guaranteed powers,” he declared.
Title: chinese are turbo-toast
Post by: awesome-o-5000 on December 30, 2013, 03:41:58 PM
Thought R.E would appreciate this, taken from china daily forum 25 december 2013.


Gordon G. Chang,best known for his book The Coming Collapse of China , has been saying for a long time that China will crash, but somehow, it never does. And this time , he predicted that China will face the inevitable reckoning in 2014.

On Friday, fears of another quarter-end credit crunch drove money-market rates in China sharply higher despite emergency central bank intervention announced Thursday.  In the last five business days, interbank rates have doubled.  The seven-day repurchase rate hit 9.9%, a level not seen since June, when it reached a record 10.77%.  The one-year rate swap last week exceeded an all-time high.

The People’s Bank of China , the central bank, refrained from its regular open-market operations last week.  Instead, it added liquidity through the larger commercial banking institutions, to the tune of 200 billion yuan according to Netease NTES +0.36% but maybe more.  Banks in recent days have been scrambling to meet quarter-end regulatory requirements, such as loan-to-deposit and reserve requirement ratios.

Analysts say the central bank is trying to tighten credit to discourage dangerous lending practices and at the same time avoid a crisis like the one in June, when banks defaulted and the interbank market froze.  Then, the People’s Bank, to avoid a failure of the Chinese economy, massively—and secretly—intervened beginning June 21.  There would have been a short-term increase in rates at the end of the third quarter but for a flood of liquidity from the central bank.

The June and December quarter-end spikes are unmistakable symptoms of the exhaustion of China’s credit-fueled growth model.

The equity markets certainly do not like what they see, with liquidity concerns weighing heavily on sentiment.  Stocks continued their losing streak on Friday, with the Shanghai Composite dropping 2.0%, the ninth-straight day in the red. Bank stocks were especially hard hit, even outside the Mainland.  China Everbright Bank , for instance, fell 2.8% on its debut on the Hong Kong exchange on Friday, despite being priced below book.  Analysts blamed general bad debt concerns for marring the first day of Everbright’s trading.

The Everbright offering, unfortunately for the bank, occurred in the wake of wide publicity of the November 29 bankruptcy filing of Liansheng Resources Group.  The failure of this coal miner, the biggest private company in inland Shanxi province, is even thought to threaten the Chinese banking system.

Why?  It is not because Liansheng went down with debt of almost 30 billion yuan or because its creditor list included some of the best Chinese banks.  Liansheng, some think, could sink China’s shadow banking network, which could in turn expose the fragility of the state banks and trigger runs by depositors on those institutions.

Today, even minor problems can become big ones overnight, and Liansheng’s difficulties illustrate how this can happen.  Jilin Trust issued a wealth management product with no assets other than loans to this coal miner.  The loans, the only assets of this WMP, are backed solely by third-party guarantees, not collateral.  The product was marketed by China Construction Bank , the country’s second-largest lender by assets, to its customers, and it was popular.  There should be no surprise as to its wide acceptance: the investment offered a 9.8% return, far in excess of deposit rates at state banks.
The Liulin County People’s Court, managing Liansheng’s bankruptcy, has indicated that investors will be the last in line for payment.  If they suffer losses from the failure of Liansheng, Quartz’s Gwynn Guilford believes they will flee WMPs.  If, on the other hand, Construction Bank is forced to make investors whole, it will have to take the WMPs it marketed onto its balance sheet and will surely exit the business along with other banks.  The purpose of these products was to permit these institutions to profit from unsound lending practices without having to make financial statement disclosures.  If depositors, not protected by deposit insurance, understand how fragile the banks truly are, they would undoubtedly panic and begin withdrawing funds quickly.

Beijing’s statistics hide the extent of the problem.  As Anne Stevenson-Yang of J Capital Research in Beijing points out, the prudential standards of Chinese banks are “deceptively low” because they have pushed “apparent risk into a cascading series of shadow institutions in order to realize rate arbitrage.”  What looks like a 20% reserve requirement ratio is really 15%, she notes, and what looks like a 75% loan-to-deposit ratio is around 90%.

Even without adding in shadow banking exposure, China’s banks are undoubtedly balance-sheet insolvent if their assets were classified according to international standards.  Yet these institutions have always remained liquid.  Now, as we have seen at the end of this quarter and the second one, they are beginning to run out of cash.

Most analysts don’t worry.  By and large, they believe the recent shortages of liquidity are the result of central bank efforts to tighten, so in their view the problems are short-term and “manufactured.”  Take the Financial Times for instance.  “Looking at interbank borrowing rates, while durations of one month and less have shot up, those from three months to one year have remained much flatter,” writes Simon Rabinovitch today.  “This is an indication that the cash crunch is more an end-of-year scramble for money than a fundamental breakdown of the Chinese financial system.”

There are two main problems with optimistic views.  First, the argument—it’s really no more than that—ignores why the central bank needs to rein in the money supply in the first place.  Chinese technocrats need to tighten because of systemic flaws, especially runaway debt creation.  Last year, China’s risk-laden shadow banking sector grew 42% according to one estimate, and credit overall may have soared by almost a third.  If credit grew by only 20%—a conservative estimate one hears—then debt is increasing more than twice as fast as officially stated gross domestic product.  My sense, based on guesses as to the extent of back-channel lending and more realistic GDP figures, is that credit is growing about seven times faster than the economy.  In any event, Beijing has no choice but to rein in credit. 

And reining in credit will inevitably create more Lianshengs.  Once they can no longer borrow, broken businesses will default across the country.  “If China is insolvent, why haven’t there been any big defaults yet?” asks Quartz’s Guilford.  “Here’s why: China’s shadow lending system keeps credit pumping to insolvent companies, so no one can tell that they’re bankrupt.”
Second, given a runaway situation, the central bank is eventually bound to cause a disaster with its remedial measures.  Not only pessimists think this.  “We believe the PBOC is faced with some serious challenges with rapid unfolding of bottom-up interest rate liberalization and is confused on whether to target volume or rates of liquidity,” writes the normally optimistic Lu Ting from Bank of America Merrill Lynch.  “With its limited predictability of flows and its insensitivity to market reactions, the PBOC finds it much more likely than before to make operation mistakes.”

The problem is even worse than the oft-quoted analyst thinks.  Lu assumes that the central bank has a way forward.  Yet it is much more likely that there is none.  Chinese technocrats continually talk about “reform” and the need to accept lower growth rates, but they always flinch, falling back on state stimulus and rampant credit creation when growth rates falter.  They do that, I suspect, because they know restructuring would cause the economy to fail.

If Beijing could implement reform, it would have done so by now.  Instead, we have seen quarter-end interest rate spikes, one more sign the inevitable reckoning will occur in 2014.

Toast????????
Title: Chinese are turbo-toast
Post by: WHD on December 30, 2013, 04:18:46 PM
 awesome-o-5000,

 :hi:   Welcome to the Diner!

Nice article. Do you have a link?

WHD
Title: Re: Official Chinese Toast Thread
Post by: Petty Tyrant on December 30, 2013, 10:08:02 PM
Awesome0
that was awesome info, but its based on cfs economics. What I understand and my understanding of economics is minimal, is China is doing all it can to keep their curremncy down, so debt creation/printing  is what they want. The sooner they stop their shit smog before it spreads the better imo.
Title: Official Chinese Toast Thread: Credit Chaos on the Horizon
Post by: RE on January 09, 2014, 03:35:58 AM
When this one blows, it will make Fukushima look like a Sunday Picnic.

RE

The Real China Threat: Credit Chaos (http://www.zerohedge.com/news/2014-01-08/real-china-threat-credit-chaos)

Submitted by Tyler Durden on 01/08/2014 20:08 -0500

As Michael Pettis, Jim Chanos, Zero Hedge (numerous times), and now George Soros have explained. Simply put -

    "There is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years."

The "eerie resemblances" - as Soros previously noted - to the US in 2008 have profound consequences for China and the world - nowhere is that more dangerously exposed (just as in the US) than in the Chinese shadow banking sector as explained below...

Submitted by Minxin Pei via The National Interest,

The spectacle of a game of financial chicken in the world’s second-largest economy is both entertaining and terrifying. Twice in 2013, the People’s Bank of China (PBOC), the country’s central bank, tried to demonstrate its resolve to rein in runaway credit growth. In June, it engineered a sudden credit squeeze that sent the interbank lending rates to more than 20 percent and caused a short-lived panic in the Chinese financial markets. Apparently, the financial turmoil was too much for the Chinese government, which quickly ordered the Chinese central bank to reverse course. As a result, the PBOC lost both face and credibility.

However, as credit growth continued unabated and activities in the most risky segment of China’s financial sector – the so-called shadow banking system – displayed alarming recklessness, the PBOC was left with no choice but try one more time to send a strong message that it could not be counted on to provide unlimited liquidity to the banking system.

It did so in December 2013 with a modified approach that provided liquidity only to the selected large banks but pressured smaller banks (which are the most active participants in the shadow banking system). Although interbank lending rates did not spike to nose-bleeding levels, as they did in June, they doubled quickly. Most Chinese banks held on to their cash and refused to lend to each other. Chinese equity markets fell nearly 10 percent, giving back nearly all the gains since mid-November, when the Chinese Communist Party’s (CCP) reform plan bolstered market sentiments.

Unfortunately for the PBOC, the renewed turbulences in the Chinese banking sector were again viewed as too dangerous by the top leadership of the CCP even though it seemed that the PBOC initially received its support. Consequently, the PBOC had to beat another hasty retreat and inject enough liquidity to force down interbank lending rates. Thus, in the first two rounds of a stand-off between the PBOC and China’s shadow banking system, the latter is widely seen as the winner. The PBOC blinked first each time.

For the moment, the conventional wisdom is that, as long as the PBOC maintains sufficient liquidity (translation: permitting credit growth at roughly the same pace as in previous years), China’s financial sector will remain more or less stable. This observation may be reassuring for the short-term, but overlooks the dangerous underlying dynamics in China’s banking system that prompted the PBOC to act in first place.

Of these dynamics, two deserve special attention.

The first one is the rapid rise in indebtedness (or financial leverage) in the Chinese economy since 2008. In five years, the country’s total debt-to-GDP ratio (including both public and private debt) rose from 130 percent to 210 percent, an unprecedented increase for a major economy. Historically, such expansion of credit hasrarely failed to inflate a credit bubble and cause a financial crisis. In the Chinese case, what makes the credit explosion even more risky is the low creditworthiness of the major borrowers. Only a quarter of the debt is owed by those with relatively high creditworthiness (consumers and the central government). The remaining 75 percent has gone to state-owned enterprises, private real-estate developers, and local governments, all of which are known to have weak loan repayment capacity (most state-owned enterprises generate low cash profits, private real-estate developers are overleveraged, and local governments have a narrow tax base). Staggering under an unsustainable debt burden of roughly 160 percent of GDP (equivalent to $14 trillion), these borrowers are expected to default on a significant portion of their bank debt in the coming years.

The second dynamic, closely related to the first one, is the growth of the shadow-banking sector. Two drivers shape activities in this sector, which operates outside the banking system. To minimize their exposure to risky borrowers, Chinese banks have curtailed their lending. But at the same time, these banks have embraced the shadow banking activities to increase their revenue. Specifically, Chinese banks peddle new “wealth management products” – short-term securities promising high interest rates – to their depositors. The issuers of such securities, which are not protected or insured by the government – are typically high-risk borrowers, such as local governments (and their financing vehicles) and real estate developers.

In the meantime, these borrowers are facing rising pressures for loan repayments in an environment of overcapacity and unprofitable investments. Unable to generate cash to service their loans, they have to turn to the shadow-banking sector for credit and avoid default. The result is an explosive growth of the size of the shadow-banking sector (now conservatively estimated to account for 20-30 percent of GDP).

Understandably, the PBOC does not look upon the shadow banking sector favorably. Since shadow-banking sector gets its short-term liquidity mainly through interbanking loans, the PBOC thought that it could put a painful squeeze on this sector through reducing liquidity. Apparently, the PBOC underestimated the effects of its measure. Largely because Chinese borrowers tend to cross-guarantee each other’s debt, squeezing even a relatively small number of borrowers could produce a cascade of default. The reaction in the credit market was thus almost instant and frightening. Borrowers facing imminent default are willing to borrow at any rate while banks with money are unwilling to loan it out no matter how attractive the terms are.

Should this situation continue, China’s real economy would suffer a nasty shock. Chain default would produce a paralyzing effect on economic activities even though there is no run on the banks. Clearly, this is not a prospect the CCP’s top leadership relishes.

So the task for the PBOC in the coming year will remain as difficult as ever. It will have to navigate between gently disciplining the banks and avoiding a financial panic. Its ability to do so is anything but assured. It has already lost the first two rounds of this game of financial chicken. We can only hope that it can do better in the next round.
Title: Re: Official Chinese Toast Thread
Post by: g on January 09, 2014, 07:00:10 PM
Predictions of the collapse of China and it's credit system have been commonplace for much of the last five years, less common going back ten. I believe it is going to happen someday, it always does to one country or another sooner or later.

There will be a world wide smash in the markets for a while, talk of the end of the world and civilization, a worldwide never ending depression; there always is. Bears and doomers will dance in  the streets applauding their wisdom, even though they were a decade or two early with their prediction, they all take credit for the day it started raining and terrorize the world with their further dire predictions, which now have credence because they predicted a rainy day when the sun was shining.

So what I say to myself? What will the response be to financial storm I say? Here again history provides us with the answer.

Print, print, print, print, print, print, print, print, print, print, print, print, print.

If it doesn't work Print More, More, More, More.

This is what the US  did. This is what Europe did. This is what Great Britain did. This is what Venezuela did, Mexico, Brazil,
Argentina, Canada, Japan, Vietnam, Thailand.

They are all doing it now and vow to do it again in the future if it isn't enough printing. Witness Ben's latest testimony. We are data dependent, if we go back into a funk we are going to Print Print Print.  Witness Abe In Japan who vows to print Yen until inflation roars and has stated so publicly. Witness Mario in Europe, We Will Do What We Have To, Believe me it will be ENOUGH.

Get it, Print, Print, Print.

Buy Gold. Buy silver. They cannot be Printed Printed Printed.


                                                               
1 oz Gold Ox
1 oz Gold Ox
Title: China Liquidity Lockup on the Horizon?
Post by: RE on January 21, 2014, 02:23:49 AM
From ZH.

The Bubble that is the Chinese Shadow Banking System is getting dangerously close to imploding now.

For Collapse Watchers, when this one goes South, we will REALLY see some ACTION!

RE

China Liquidity Fears Ease As PBOC Injects 255 Billion CNY - Most Since Feb 2013 (http://www.zerohedge.com/news/2014-01-20/china-liquidity-fears-ease-pboc-injects-255-billion-cny-most-feb-2013)
         
 (http://www.zerohedge.com/sites/default/files/pictures/picture-5.jpg) (http://www.zerohedge.com/users/tyler-durden)
   
Submitted by Tyler Durden (http://www.zerohedge.com/users/tyler-durden) on 01/20/2014 20:58 -0500

 
Despite all the reform policy imperatives to constrict credit and normalize and liberalize policy and rates, the PBOC just provided the largest liquidity injection to its banking system in a year - 255bn CNY. While this is not entirely unusual for a year-end, when Chinese banks have to confess their illiquidity sins and cover mismatches (and are always helped by the PBOC); this year, short-term money-market rates are triple that of last year and there is a very real chance of a very real default within the shadow banking system. Of course, the sell-side are desperately writing cover that this is all priced in and even if the PBOC "lets some Trusts go" then they will come to the rescue and any crisis will be "contained." However, no one knows who will be saved and therein lies the safety-first rub - now where have we heard "contained" before?
 
China Repo (lower) and Reverse Repo liquidity provision...(biggest liquidity provision in a year)
(http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/01/20140120_china1_0.png) (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/01/20140120_china1.png)
 
Crucially, the PBOC will have to withdraw this liquidty (obviously as the repo matures) if it is merely year-end window-dressing (as is obvious in the chart above with the large downward red bars in each Feb).
For now short-term repo rates are lower
1d: -85bps at 3.48%
7d: -135bps at 5.25%
14d: -34bps at 5.57%
But of course, the big banks always bid first and scoop up the supply - just as we saw yesterday - its the smaller banks that are the most in distress and 7-day repo went through a 8, 9, and 10% rates - these are triple those of the peak rates during last year's new-year liquidty crunch.
(http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/01/20140120_china2_0.png) (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/01/20140120_china2.png)
 
And as much as banks will contend - just as the China itself admitted tonight:

Credit default risks with Chinese companies are emerging because of rising borrowing costs and tight liquidity conditions, said the official China Securities Journal in a front page editorial. The government needs policy flexibility to prevent any systematic financial risks.

This problem - described as "contained" by one sell-side shop reminds us of the "it could never happen here" mentality in the 2008 US shadown banking system. Critically, when the PBOC suggests it may let some banks go (to prove its mettle and resolve to fight out of control credut creation); investors will sell first and think later about which are safe and which are not. A 'default' - which looks increasingly likely - may just be the test of just how 'planned' and 'controlled' the Chinese banking system can really be...
 
We have on little question... for now the only Wealth Management Trust product that is publicly on the verge of default is CEQ#1 and that is only a 3 billion CNY position (http://www.zerohedge.com/news/2014-01-16/chinese-stocks-tumble-contagion-concerns-first-shadow-banking-default) - so why did the PBOC feel the need to provide more than 80 times that amount of liquidity to the banking system unless it was epically worried about contagion and the total size of the Trust market.
 
Of course, the knne-jerk reaction is positive (well it is 255 Billion CNY of magic money) but between the BoJ starting its two-day meeting and John Hilsenrath confirming that Taper is here to stay - JPY weakness (and USD strength) are dragging stocks higher with S&P futures +7.5 from Friday's close.
 
Fun-DURR-mentals?
(http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/01/20140120_china3_0.png) (http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/01/20140120_china3.png)
 
Charts: Bloomberg
Title: Re: Official Chinese Toast Thread: The End of Communist Party Rule in China?
Post by: g on January 22, 2014, 05:04:18 PM
An absolutely terrifying article about developments in China from our friends at TAE which I felt was must diner reading. :-\

                                                      The more I read about China, the more chaotic it seems to become, and the more I start to doubt the generally accepted notion that the Communist Party (+PBOC) is in control. If we accept that the politburo has little or no control of the shadow banking system, and that the latter is worth $5.86 trillion, or 69% of Chinese GDP, why would we still assume the politburo controls China’s economy and banking system?

There was another credit – interbank – squeeze over the weekend, and, as Zero Hedge said, the PBOC injected 255 billion yuan (some $40 billion, $1 is a little over 6 yuan) amid a lot of unease:

China Liquidity Fears Ease As PBOC Injects 255 Billion CNY – Most Since Feb 2013

    Despite all the reform policy imperatives to constrict credit and normalize and liberalize policy and rates, the PBOC just provided the largest liquidity injection to its banking system in a year – 255 billion CNY. While this is not entirely unusual for a year-end, when Chinese banks have to confess their illiquidity sins and cover mismatches (and are always helped by the PBOC); this year, short-term money-market rates are triple that of last year and there is a very real chance of a very real default within the shadow banking system.

    Credit default risks with Chinese companies are emerging because of rising borrowing costs and tight liquidity conditions, said the official China Securities Journal in a front page editorial. The government needs policy flexibility to prevent any systematic financial risks.

    This problem – described as “contained” by one sell-side shop reminds us of the “it could never happen here” mentality in the 2008 US shadow banking system. Critically, when the PBOC suggests it may let some banks go (to prove its mettle and resolve to fight out of control credit creation); investors will sell first and think later about which are safe and which are not. A ‘default’ – which looks increasingly likely – may just be the test of just how ‘planned’ and ‘controlled’ the Chinese banking system can really be…

On Tuesday, Zero Hedge reported the injection didn’t help much to quiet things down.

China’s Liquidity Injection Did Not Calm All Its Credit Markets

    While last night’s almost unprecedented reverse repo liquidity injection into the Chinese banking system stopped the bleeding of short-dated money-market rates briefly, the likelihood remains that a shadow-banking system default will occur: As CASS’s Zhang noted:

    *China Trusts And Shadow Banking To See Defaults In 2014: Zhang
    *China Shadow-banking Defaults Would Be Good Thing: Cass’s Zhang

    Perhaps that explains why China’s CDS spread remains at its highest since the summer credit crunch, barely budging on last night’s cash drop. At double the default risk of Japan, China appears far from out of the contagion fire.


The unease, from what I can see, seems due to two questions: who’s really in control, and which funds will be allowed to go broke, leaving investors out of pocket? Maybe a third question should be: how much of this will the Chinese people accept before unrest breaks out? If there’s a cascade of failing Wealth Management Products – and perhaps the trust companies that sold them -, what are those who put their savings in them going to say? Moreover, what will the effect be on the economy as a whole?

The numbers at times are nothing short of staggering. Here’s a choice selection I provided 2 weeks ago:

Perverse Incentives, China And You

        Bank lending dropped to 57% of direct and contingent liabilities as of June 30 from 79% at the end of 2010

        Premier Li Keqiang is cracking down on less-regulated shadow banking activities, estimated by JPMorgan Chase & Co. at $6 trillion in May last year

        Local government debt overdue at the end of June was 1.15 trillion yuan, or 10.56% of borrowings

        … growth in bank loans to local governments slowed to 19% to 10.1 trillion yuan from the end of 2010 to June 30, 2013, compared with a 67% jump in total debt

        Liabilities at non-financial companies may rise to more than 150% of gross domestic product in 2014, raising default risks, according to Haitong Securities Co. The ratio of 139% at the end of 2012 was already the highest among the world’s 10 biggest economies, according to the most recent data. That compares with 108% in France, 103% in Japan and 78% in the U.S

        Companies must repay a record 2.6 trillion yuan ($430 billion) of borrowings this year even after bond yields surged and economic growth slowed to the weakest in more than a decade. [..]

        China’s aggregate financing, the broadest measure of new credit, climbed 14% to 16.1 trillion yuan in the first 11 months of last year from the same period in 2012, central bank data showed. Total debt of publicly traded companies in China and Hong Kong has surged to the equivalent of $1.92 trillion from $607 billion at the end of 2007

The moment this could blow up is rapidly getting closer. Over the weekend, Gordon Chang wrote the following for Forbes. Note, as I said, I find it hard to believe that, as Chang contends, “Beijing technocrats dictate outcomes”. I’m starting to think perhaps the shadow banking system demands liquidity injections, both openly and hidden from view, under a threat of “or else”. Plus, the distinction between government and the shadow economy inevitably fades as politicians jockey for position to avoid being caught out by developments.

How’s next Friday for you?

Mega Default In China Scheduled For January 31

    On Friday, Chinese state media reported that China Credit Trust Co. warnedinvestors that they may not be repaid when one of its wealth management products matures on January 31, the first day of the Year of the Horse.

    The Industrial and Commercial Bank of China sold the China Credit Trust product to its customers in inland Shanxi province. This bank, the world’s largest by assets, on Thursday suggested it will not compensate investors, stating in a phone interview with Reuters that “a situation completely does not exist in which ICBC will assume the main responsibility.”

    There should be no mystery why this investment, known as “2010 China Credit-Credit Equals Gold #1 Collective Trust Product,” is on the verge of default. China Credit Trust loaned the proceeds from sales of the 3.03 billion-yuan ($496.2 million) product to unlisted Shanxi Zhenfu Energy Group, a coal miner. The coal company probably is paying something like 12% for the money because Credit Equals Gold promised a 10% annual return to investors—more than three times current bank deposit rates—and China Credit Trust undoubtedly took a hefty cut of the interest.

    Zhenfu was undoubtedly desperate for money. One of its vice chairmen was arrested in May 2012 for taking deposits without a banking license, undoubtedly trying to raise funds through unconventional channels. In any event, the company was permitted to borrow long after it should have been stopped—reports indicate that it had accumulated 5.9 billion yuan in obligations. Zhenfu, according to one Chinese newspaper account, has already been declared bankrupt with assets of less than 500 million yuan.

    The Credit Equals Gold product is not the first troubled WMP, as these investments are known, to risk nonpayment, but Chinese officials have always managed to make investors whole. CITIC Trust did that in 2013 on a steel-loan product in Hubei province, and a mysterious third-party guarantee rescued a Hua Xia Bank WMP. An investment marketed by ICBC’s Suzhou branch was similarly repaid.

    There has never been a default – other than one of timing – of a WMP, so the Credit Equals Gold product could be the first. If it is, it will edge out the WMP that invested in loans to Liansheng Resources Group, another Shanxi coal miner. Jilin Trust packaged Liansheng’s loans into a wealth management product sold by China Construction Bank , the country’s second-largest lender by assets, to its customers. Liansheng is in bankruptcy, and it looks like the WMP holders will not be repaid in full.

    A WMP default, whether relating to Liansheng or Zhenfu, could devastate the Chinese banking system and the larger economy as well. In short, China’s growth since the end of 2008 has been dependent on ultra-loose credit first channeled through state banks, like ICBC and Construction Bank, and then through the WMPs, which permitted the state banks to avoid credit risk. Any disruption in the flow of cash from investors to dodgy borrowers through WMPs would rock China with sky-high interest rates or a precipitous plunge in credit, probably both. The result? The best outcome would be decades of misery, what we saw in Japan after its bubble burst in the early 1990s.

    Most analysts don’t worry about a WMP default. Their argument is that the People’s Bank of China, the central bank, is encouraging a failure of the Zhenfu product to teach investors to appreciate risk and such lesson will improve the allocation of credit nationwide. Furthermore, they reason the central authorities would never allow a default to threaten the system. Observers make the logical argument that “to have a market meltdown, you have to have a market” and China does not have one. Instead, Beijing technocrats dictate outcomes.

    That’s correct, but that is also why China is now heading to catastrophic failure. Because Chinese leaders have the power to prevent corrections, they do so. Because they do so, the underlying imbalances become larger. Because the underlying imbalances become larger, the inevitable corrections are severe. Downturns, which Beijing hates, are essential, allowing adjustments to be made while they are still relatively minor. The last year-on-year contraction in China’s gross domestic product, according to the official National Bureau of Statistics, occurred in 1976, the year Mao Zedong died.

    Why will China’s next correction be historic in its severity? Because Chinese leaders will prevent adjustments until they no longer have the ability to do so. When they no longer have that ability, their system will simply fail. Then, there will be nothing they can do to prevent the freefall.

    Even if Beijing makes sure there is no default on January 31, we should not feel relief. Just as Zhenfu followed Liansheng, there will be another WMP borrower on the edge of disaster after Zhenfu. And there are many Lianshengs and Zhenfus out there. There may have been 11 trillion yuan in WMPs at the end of last year.

    And at the same time China’s money supply and credit are still expanding. Last year, the closely watched M2 increased by only 13.6%, down from 2012’s 13.8% growth. Optimists say China is getting its credit addiction under control, but that’s not correct. In fact, credit expanded by at least 20% last year as money poured into new channels not measured by traditional statistics. That appears to be in excess of credit expansion in 2012.

    Even if credit expansion slowed last year, Silvercrest Asset Management’s Patrick Chovanec tells us why we should be concerned. As he wrote today, “Looking purely at the decline in the year-on-year rate of credit expansion is kind of like arguing that if I chase my shot of vodka with a pint of beer, I’m actually exercising moderation because the alcohol proof level of my drinks is falling.”

Michael Snyder has a few more numbers:

The $23 Trillion Credit Bubble In China Is Starting To Collapse

    Since Lehman Brothers collapsed in 2008, the level of private domestic credit in China has risen from $9 trillion to an astounding $23 trillion. That is an increase of $14 trillion in just a little bit more than 5 years. Much of that “hot money” has flowed into stocks, bonds and real estate in the United States. So what do you think is going to happen when that bubble collapses? ::) ::)

    The bubble of private debt that we have seen inflate in China since the Lehman crisis is unlike anything that the world has ever seen. Never before has so much private debt been accumulated in such a short period of time. All of this debt has helped fuel tremendous economic growth in China, but now a whole bunch of Chinese companies are realizing that they have gotten in way, way over their heads. In fact, it is being projected that Chinese companies will pay out the equivalent of approximately a trillion dollars in interest payments this year alone. That is more than twice the amount that the U.S. government will pay in interest in 2014.

    Over the past several years, the U.S. Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England have all been criticized for creating too much money. But the truth is that what has been happening in China surpasses all of their efforts combined. As the Telegraph pointed out a while back, the Chinese have essentially “replicated the entire U.S. commercial banking system” in just five years…

        Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. “They have replicated the entire U.S. commercial banking system in five years,” she said.

        The ratio of credit to GDP has jumped by 75 percentage points to 200% of GDP, compared to roughly 40 points in the US over five years leading up to the subprime bubble, or in Japan before the Nikkei bubble burst in 1990. “This is beyond anything we have ever seen before in a large economy. We don’t know how this will play out. The next six months will be crucial,” she said.

    Overall, M2 in China is up by about 1000% since 1999. That is absolutely insane. The truth is that what has been going on in the global financial system is completely and totally unsustainable, and it is inevitable that it is all going to come horribly crashing down at some point during the next few years. It is just a matter of time.

It’s interesting to ponder how a new report from the International Consortium of Investigative Journalists, People’s Republic of Offshore , will play out against all this. We’ve seen a few details last year reports by the New York Times and Bloomberg, who were promptly banned for it, but this is a different ball game altogether, and a pretty unbelievable story. Just about everybody who’s somebody in Beijing has accounts in offshore havens in the Caribbean. A total of up to $4 trillion has been smuggled out of China this way … Let’s see what the victims of upcoming WMP failures have to say about that. The Guardian has good coverage of the report:

China’s princelings storing riches in Caribbean offshore haven

    More than a dozen family members of China’s top political and military leaders are making use of offshore companies based in the British Virgin Islands (BVI), leaked financial documents reveal. The brother-in-law of China’s current president, Xi Jinping, as well as the son and son-in-law of former premier Wen Jiabao are among the political relations making use of the offshore havens, financial records show.

    The documents also disclose the central role of major Western banks and accountancy firms, including PricewaterhouseCoopers, Credit Suisse and UBS in the offshore world, acting as middlemen in the establishing of companies. The Hong Kong office of Credit Suisse, for example, established the BVI company Trend Gold Consultants for Wen Yunsong, the son of Wen Jiabao, during his father’s premiership — while PwC and UBS performed similar services for hundreds of other wealthy Chinese individuals.

    The disclosure of China’s use of secretive financial structures is the latest revelation from “Offshore Secrets”, a two-year reporting effort led by the International Consortium of Investigative Journalists, ICIJ , which obtained more than 200 gigabytes of leaked financial data from two companies in the British Virgin Islands, and shared the information with the Guardian and other international news outlets.

    In all, the ICIJ data reveals more than 21,000 clients from mainland China and Hong Kong have made use of offshore havens in the Caribbean, adding to mounting scrutiny of the wealth and power amassed by family members of the country’s inner circle.

    As neither Chinese officials nor their families are required to issue public financial disclosures, citizens in the country and abroad have been left largely in the dark about the elite’s use of offshore structures which can facilitate the avoidance of tax, or moving of money overseas. Between $1 trillion and $4 trillion in untraced assets have left China since 2000, according to estimates.

    China’s rapid economic growth is leading to a degree of internal tension within the nation, as the proceeds of the country’s newfound prosperity are not evenly divided: the country’s 100 richest men are collectively worth over $300 billion, while an estimated 300 million people in the country still live on less than $2 a day. The Chinese government has made efforts to crack down citizens’ movements aimed at promoting transparency or accountability among the country’s elite. [..]

    One Chinese political family whose financial affairs have not escaped scrutiny
— at least in the west — is that of the former premier, Wen Jiabao. In November, the New York Times reported that a consultancy firm operated by Wen’s daughter, who often goes by the name Lily Chang, had been paid $1.8 million by the US financial services giant JPMorgan.

    The payment has become one of the targets of a probe by US authorities into the activities of JPMorgan in China, including an examination of the firm’s hiring practices, which are alleged to have included the deliberate targeting of relatives of influential officials.

    However, the ICIJ files reveal the role of the BVI’s offshore secrecy in obscuring Chang’s links with her consulting firm, Fullmark Consultants. The company was set up in the BVI by Chang’s husband, Liu Chunhang, in 2004, and he remained as sole director and shareholder until 2006, when he took a job in China’s banking regulation agency.

    [..] … in a recent letter dated December 27th apparently sent to a Hong Kong columnist amid public anti-corruption probes into other former officials, Wen Jiabao is reported to have denied any wrongdoing during his premiership, or in how his family obtained their reported wealth. “I have never been involved and would not get involved in one single deal of abusing my power for personal gain because no such gains whatsoever could shake my convictions,” he is reported to have written. [..]

    The ICIJ records also detail a company connected to Deng Jiagui, the husband of the older sister of Xi Jinping, China’s president, who has cultivated a public image as an anti-corruption campaigner. According to the BVI records, Deng, a real-estate developer and investor, owns a 50% stake in the BVI-incorporated Excellence Effort Property Development. Ownership of the remainder of the company traces back to two Chinese property tycoons, who last year won a $2 billion real estate bid.

    China’s political elite were not the only individuals taking advantage of the BVI’s offshore anonymity. At least 16 of China’s richest people, with a combined estimated net worth in excess of $45bn, were found to have connections with companies based in the jurisdiction. China has become a vital client for offshore jurisdictions. The ICIJ’s database of offshore owners and shareholders has six times as many addresses tied to China or Hong Kong [21,321] than it does to the USA [3,713].

    The BVI’s courtship of China’s rich and powerful may prove an embarrassment for the United Kingdom. The BVI remains a British overseas territory, and while largely independent in practice, UK authorities retain a degree of responsibility and connection with the islands. [..]

    The role of major Western financial institutions in establishing offshore structures has also attracted scrutiny, despite being a routine and entirely legal function for many of them.

    The ICIJ records show both PricewaterhouseCoopers and UBS had extensive contacts with incorporation agents in the BVI and other territories in the region. In total, UBS helped incorporate more than 1,000 offshore institutions for clients from China, Hong Kong or Taiwan, while PwC had a role in establishing at least 400. [..]

    The amassed wealth and alleged corruption among China’s political elite has been a topic of growing interest not only in the Western media, but also — to a limited extent — within China itself.

    Spurred on by President Xi’s public statements around anti-corruption efforts, a Chinese academic and activist, Xu Zhiyong, inspired a “New Citizens’ Movement” in the country — an informal civil society group which among other goals aims to increase the financial transparency of the country’s elite and curbing corruption.

    The movement, however, has faced strong opposition from Chinese authorities. Numerous participants in the New Citizens Movement have been arrested at public gatherings, while its founder Xu is in prison facing charged of “gathering a crowd to disrupt public order”, and faces up to five years in prison. Meanwhile, international journalists who have reported from within the country on the wealth of China’s political elite have faced immigration difficulties from the government, or trouble with authorities.

Trouble seems set to beset China from all directions. Western media have for years waxed orgasmic about the economic growth miracle, but they better find a new way to define what it turns out to be. It’s all been too much, too big, too fast. It may look nice to grow 7% in a year, but if you must grow that fast or implode, it gets a whole lot less attractive.

And now it looks inevitable that the working people, who’ve long dreamed of better lives, will start losing their investment money. While 300 million still live on $2 a day or less. That’s what you find in the dictionary under “powder keg”. Rest assured the Red Army is preparing. But for how long will they be willing to shoot their family, friends and neighbors? Remember asking that question about Russia, Romania, East Germany?

Are we about to witness the end of Communist Party rule in China?


http://feedproxy.google.com/~r/theautomaticearth/OCyb/~3/ab2Jn4x13rM/ (http://feedproxy.google.com/~r/theautomaticearth/OCyb/~3/ab2Jn4x13rM/) :icon_study: :icon_study: :icon_study: :( :(
Title: Re: Official Chinese Toast Thread
Post by: Surly1 on January 22, 2014, 05:23:13 PM
Thanks for posting, GO. Interesting to see all of these different posts one might have read elsewhere wrapped together.

Quote
    On Friday, Chinese state media reported that China Credit Trust Co. warnedinvestors that they may not be repaid when one of its wealth management products matures on January 31, the first day of the Year of the Horse.

Whether it's China or Greece, one of these dominoes is going to fall and start the chain reaction of toppling. Great the hue and cry therefrom...
Title: Re: Official Chinese Toast Thread
Post by: g on January 22, 2014, 06:56:26 PM
Thanks for posting, GO. Interesting to see all of these different posts one might have read elsewhere wrapped together.

Quote
    On Friday, Chinese state media reported that China Credit Trust Co. warnedinvestors that they may not be repaid when one of its wealth management products matures on January 31, the first day of the Year of the Horse.

Whether it's China or Greece, one of these dominoes is going to fall and start the chain reaction of toppling. Great the hue and cry therefrom...

It won't be pretty when it happens Surly, hope we can survive it with minimal damage, but it is looking real bad.
Title: Re: Official Chinese Toast Thread - Need a Chinese Wife?
Post by: WHD on January 22, 2014, 06:59:55 PM
Quote
Are we about to witness the end of Communist Party rule in China?

Poor Ilargi. When the auto Ad generator worked when I went there:

(http://pagead2.googlesyndication.com/simgad/17347850612209944096)
Title: 1st Big Chinese Default: T-Storm on the Horizon?
Post by: RE on January 23, 2014, 02:03:32 AM
Below follows the Goldman POV, from the Piglets at ZH.  Don your Galoshes and break out the Umbrellas.  Looks like it will be RAINING CHINESE PIGMEN here with the Chinese New Year.

T-Storm On the Horizon
(http://icons-ak.wunderground.com/data/wximagenew/r/robipilot/6.jpg)

http://www.youtube.com/v/l5aZJBLAu1E?feature=player_detailpage

RE

China's First Default Is Coming: Here's What To Expect (http://www.zerohedge.com/news/2014-01-22/chinas-first-default-coming-heres-what-expect)

Submitted by Tyler Durden on 01/22/2014 20:46 -0500

As we first reported one week ago, the first shadow default in Chinese history, the "Credit Equals Gold #1 Collective Trust Product" issued by China Credit Trust Co. Ltd. (CCT) due to mature Jan 31st with $492 million outstanding, appears ready to go down in the record books.

Of course, in a world awash and supported by moral hazard, where tens of trillions in financial asset values are artificial and only exist due to the benevolence of a central banker, it would be all too easy to say that China - fearing an all too likely bank run on comparable shadow products (of where there a many) as a result - would just step in and bail it out. However, at least until today, China has maintained a hard line on the issue, indicating that as part of its deleveraging program it would risk a controlled default detonation, in order to realign China's credit conduits even though such default would symbolically coincide with the first day of the Chinese New Year.

In turn, virtually every sellside desk has issued notes and papers advising what this event would mean ("don't panic, here's a towel", and "all shall be well"), and is holding conference calls with clients to put their mind at ease in the increasingly likely scenario that there is indeed a historic "first" default for a country in which such events have previously been prohibited.

So with under 10 days to go, for anyone who is still confused about the role of trusts in China's financial system, a default's significance, the underlying causes, the implications for the broad economy, and what the possible outcomes of the CCT product default are, here is Goldman's Q&A on a potential Chinese trust default.

From Goldman Sachs: A Matter of Trust

Q. What has happened?

Local and international media (e.g. Caixin, Financial Times) have reported that a RMB 3bn three-year investment trust issued by China Credit Trust Company (CCT) is at risk of not making its principal repayment due investors on January 31 (which also happens to be the first day of the Chinese New Year). The trust assets were used to make a loan to a coal mine company for mine acquisition and related investments, but the company has still not received licenses related to two of five planned mines, and the owner of the company was reportedly arrested in 2012 for illegal deposit taking. It has been reported that ICBC referred the project to CCT, which structured the trust product as a “collective trust” rather than a “single trust” that typically is used by banks to securitize loans. The trust was sold through ICBC to approximately 700 private banking clients, and reports suggest that ICBC will not guarantee investors in the trust against losses. Our China banks team published detailed information on the trust structure, as well as shareholders and financials of the trust company (see “CCT trust product risk; potential scenarios imply slower trust/TSF growth”, January 20, 2014).

Q. What exactly is a Chinese “trust” and how is it structured?

A trust is essentially a private placement of debt. Investors in the trust must meet certain wealth requirements (several million RMB in assets would not be unusual, so the investors are either high net worth individuals or corporates) and investments have a minimum size (e.g. RMB 1mn). The appeal is a much higher yield than can be obtained through conventional bank deposits, in many cases 10% or higher, versus regulated multiyear bank term deposit rates in the low single digits. Trusts invest in a variety of sectors, including various industrial and commercial enterprises, local government infrastructure projects (via LGFVs), and real estate.

As our banks team noted, 29% of trust assets are invested in higher-risk industrial or commercial sectors.

A trust is not to be confused with a “wealth management product” (WMP). WMPs are available to a broader group of individuals, with much smaller minimum investments. They are typically sold through and managed by banks or securities brokers, with or without a guarantee of the payment of interest or principal (WMPs featuring explicit guarantees are booked on banks’ balance sheets; for other non-principal guaranteed products, implicit guarantees may be assumed by some investors). Funds from WMPs may be invested in a range of products including corporate bonds, trust loans, interbank assets, securitized loans, and discounted bills—so WMPs are best thought of as a “money market fund” or pool for other financial products.

Q. How do trusts fit within the “shadow banking” sector in China?

Trust assets total some RMB 10trn as of late 2013. Though small as a share of the total stock of credit in China (Exhibit 1), trust assets have been growing at an annual rate of over 50% in recent years. The net new credit extension from trusts approached RMB 2trn in 2013 based on estimates from our bank analysts, or more than one-tenth of broad credit flow (total social financing) for the year. (Please refer to the “CCT trust product risk” note cited above for further detail on trust asset growth and composition.)

Exhibit 1: Trusts still small as a share of total financing, but growing rapidly


Source: Goldman Sachs Global Investment Research.

Some clients have asked about comparisons between the Chinese trusts and the SIVs (structured investment vehicles, sometimes known as “conduits”) that were prominent in the US financial crisis. The SIVs were off-balance sheet vehicles generally funded with short-term commercial paper (“asset-backed commercial paper”) with a period of a few days to a few months. Initially, these SIVs invested in relatively low risk, short-term receivables, although over time exposures shifted towards more complex, longer-term structured products such as subprime mortgage-backed securities or collateralized debt obligations. As doubts about asset quality began to arise in 2007, market funding conditions for the SIVs quickly deteriorated, requiring sponsoring banks to provide liquidity support and ultimately consolidate these assets on the balance sheet, which exacerbated funding pressures as well as asset write-downs. Similarities to Chinese trusts include the linkages with banks, the off-balance sheet nature of the trusts (true for many WMPs also), and the maturity transformation aspect (though it should be noted this is less extreme in the case of trusts, where investors are often committed for a period of a year or more, than for most SIVs; even WMPs typically have commitments of 3-12 months). Important differences include the relatively simpler assets of Chinese trusts – often loans, as in the CCT example – and the fact that the Chinese banking system is funded domestically (many SIVs raised funding across borders).

Q. Why is the potential default of a trust important?

With a large volume of trust products scheduled to mature this year, who bears the losses in the event of a default could set an important precedent. In our detailed research on the China credit outlook last year (see “The China credit conundrum: risks, paths, and implications”, July 26, 2013), we explicitly identified “removal of implicit guarantees” as one of four potential ‘risk triggers’ for a broader credit crisis. If the realization of significant losses by investors causes others to pull back from funding various forms of “shadow banking” credit, overall credit conditions could theoretically tighten sharply, with consequent damage to growth.
From the perspective of policymakers, the default of a trust under the current circumstances might be seen as having less risk of contagion than some other “shadow banking” products. First, the trust is explicitly not guaranteed by either the trust company or the distributor. Second, the investor base of a trust is typically a relatively small group of wealthy/sophisticated investors (the minimum investment in the CCT trust mentioned above was RMB 3mn). This contrasts with broadly offered wealth management products, which have many more individual investors with less investment experience and more modest personal finances. Third, the particular circumstances of this trust (lending to an overcapacity sector, failure to obtain key business licenses, arrest of the borrowing company’s owner) might make it easier for authorities to portray as a special case. Put another way, if the authorities felt obliged to provide official support to this product, it is not clear under what circumstances they would be comfortable letting any trust or wealth management product default.

Q. What are the options for policymakers?

The fundamental issue for policymakers is how any losses would be distributed among 1) investors, 2) the trust company and/or distributing bank, 3) the government and government-related entities. Potential options include:

    Allowing the trust to default (investors take losses). As noted above, this would call into question the implicit guarantees perceived by some trust buyers, thereby increasing the risk that new trusts or other non-guaranteed products such as WMPs face more difficulty obtaining funds, leading to tighter overall credit conditions. On the positive side, it would encourage greater focus on the underlying credit quality and better risk pricing going forward.
    Trust company and/or distributing bank provide support (levered institutions take the principal and/or interest losses), making an implicit guarantee explicit. Although legally there are no guarantees of principal from either the trust company or ICBC, to the extent the trust company manager or the distributing bank were obligated by policymakers (or other reputational or legal considerations) to provide support, it could prompt loss recognition, or at the worst a need for capital raising or shrinkage of the balance sheet if losses are substantial. As such, the quality of the underlying assets and due diligence are key to determine whether and how much losses might be taken by these institutions. Investor demand for trusts might rise after such a demonstration of support, but the higher perceived liability on the part of financial institutions would presumably reduce their appetite for issuing such products in the future.
    Government-backed entity provides support (government takes losses). In this case, the short-term market reaction would presumably be relief, as refinancing risks would be reduced and both banks and trusts would be off the hook. However, moral hazard for both issuers and investors would be increased, raising the risk of credit problems further down the road. Policymakers might try to minimize this moral hazard by providing support indirectly (via some government-supported entity or third party, rather than publicly and directly) and/or by providing only partial support. An example of the former occurred last year, when an “unnamed party”, possibly the local government which provided some land collateral and guarantees to the trust loans, intervened to purchase the defaulted loans of a steel plate manufacturer, enabling the investors in a CITIC WMP to be repaid fully (see “Latest China bailout reveals risk of local government’s hidden debts”, Reuters, May 7 2013).

Some mix of these options is of course possible, if the financial institutions or government provides partial support. Most observers seem to expect at least a partial bailout of the investors, reflecting a compromise between concerns about moral hazard and concerns about contagion. Unless there is a total bailout explicitly funded by the government, credit conditions in the trust sector seem likely to tighten at least modestly. Some central government level policymakers could be open to seeing a default, as it would encourage more careful risk assessment and help to contain credit growth going forward. However, other central government and many local government policymakers might be more inclined to contain the problem. Local officials in particular may feel more pressure to support key local enterprises that are major employers and taxpayers; in the current case, officials could in theory take actions such as granting mining licenses to make the trust assets more valuable.

Q. What should investors watch to track the broader market impact?

Besides the immediate news on what approach officials take in the case of the CCT trust, investors can watch other financial metrics for signs of stress. As always, interbank rates are useful as an indicator of the marginal cost of bank funding. Spreads to yields on nonbank products may reflect their perceived risk, although they could also be affected by other factors such as tight overall liquidity conditions. While we do not have high frequency data on trust yields, WMP yields have moved higher of late. Finally, data on credit volumes will be important to watch. To the extent conditions tighten, this should become visible in monthly total social financing flows (the trust portion in particular).

Q. What is the potential impact on economic growth and markets?

The growth impact of a trust default is highly uncertain, as it represents the product of two unknowns. The first unknown is the change in overall credit extension which would result from the default, and the second unknown is the sensitivity of economic growth to new credit. In work last year on the relationship between credit and growth (“The ‘credit impulse’ to Chinese growth”, April 11, 2013), we estimated a RMB 300bn change in the average monthly credit flow would have an impact of 80bp on sequential annualized real GDP growth in the following quarter (with further, gradually fading effects in subsequent quarters if the lower credit flow persisted). This is not far from the average monthly flow of trust loans in 2013 implied by our bank analysts’ estimates. So with our assumption on credit sensitivity, a hypothetical sharp tightening in funding conditions that stifled this flow of new credit (not affecting existing trusts) would imply an 80bp hit to sequential (annualized) growth the following quarter, and roughly a 50bp hit to yoy growth over the following year. Intuitively, the modest estimated impact stems from the small size of the trust sector in the overall financial system. We emphasize the very high degree of uncertainty in these calculations—this is a back-of-the-envelope illustration rather than a forecast. On the side of a smaller effect, officials could take steps to reduce the impact on trust lending or other lending channels could pick up the slack; on the side of a bigger impact, spillovers could occur to non-trust lending or to the real economy via effects on business or consumer confidence.

In the credit markets, more willingness to allow losses should lead to greater differentiation between stronger and weaker credits. This is a theme we have emphasized for some time, including in our in-depth work on the China credit outlook last summer.

A policy/credit tightening bias may put pressure on China equities in the near-term, particularly credit-dependent, investment-heavy cyclical sectors. Investors are unlikely to reward either option 1 or option 2 above, as the default option may trigger contagion and risks to growth (thus earnings as well) and the “bailout by financial institutions” option is structurally unappealing (thus risks valuation). Option 3 is probably the only outcome that would support a slight market rebound near-term, in our view, as immediate contagion is averted and listed financial conditions are protected from bearing losses—though at the cost of longer-term moral hazard.
Title: Re: Official Chinese Toast Thread:China's First Default
Post by: g on January 23, 2014, 05:10:21 AM
An interesting article.

It appears to me after first reading that they feel it can be contained, I have reservations about that.

While it certainly looks to be an objective studied report, my deep distrust and dislike of Goldman Suchs rings all sorts of suspicion and beware of being conned bells that would not exist from a respected trustworthy author.
Title: Re: Official Chinese Toast Thread:China's First Default
Post by: WHD on January 23, 2014, 07:44:48 PM
An interesting article.

It appears to me after first reading that they feel it can be contained, I have reservations about that.

While it certainly looks to be an objective studied report, my deep distrust and dislike of Goldman Suchs rings all sorts of suspicion and beware of being conned bells that would not exist from a respected trustworthy author.

I would think that whatever we can read from Goldman Sachs, is probably the opposite of what they are telling their crony's.

WHD
Title: Re: Official Chinese Toast Thread: The Case for China’s “Long Landing”
Post by: g on January 30, 2014, 05:32:18 AM
An academics view, not exactly optimistic but less horrific than mine and those of other Diners. Thought I would include it here to show the middle of the road view.  :dontknow:

The Case for China’s “Long Landing” of Much Slower but Healthier Growth

By Michael Pettis
Created 01/29/2014 - 08:57

I got a lot of feedback from my January 5 blog entry because of my argument that the implementation of the reforms proposed in the Third Plenum all but guarantees that growth rates in China will slow down. For that reason I thought it might make sense for me to explain a little more carefully why I think this must happen, and why I think that we can almost judge how successfully the reforms are implemented by how quickly growth slows.

The first point to recognize is that when a country’s growth has been driven by wasteful investment, GDP growth will exceed real economic wealth creation, productivity will be overstated, and debt will rise faster than debt servicing capacity. Why? Because in China we record growth in terms of the cost of inputs, not in terms of the value of the outputs, and so if the cost of inputs exceeds the value of outputs, we will overstate the real value of economic activity.

Now of course this happens elsewhere too, but there is an automatic mechanism for writing down this excess. This mechanism is usually the recognition of bad debt. Companies that invest poorly go bankrupt, and the value of their loans is written off. This writing off of bad loans shows up as a correction to the overstatement of growth and productivity.

In a system in which bad debt isn’t written down, the losses are simply hidden and rolled over. Of course after many years they are effectively written down, but this happens indirectly. In order to service the loans there is an explicit or hidden transfer from some other part of the economy to cover the full extent of the losses, so that future growth is reduced by the amount of the transfer.

Over long periods of time, in other words, real economic value and recorded economic value is the same, but over shorter periods of time they can differ enormously. If a country fails to record bad debt, its growth today will be overstated by that amount, but its future growth over the longer term will be understated by the same amount.

I think most of us agree that a significant share of the loans in the Chinese banking system would be considered, from an economic point of view, as bad loans. They were made to support investments the true economic value of whose outputs are less than the cost of the inputs. Because many of these loans are implicitly guaranteed, it may make prefect legal sense for the banks to treat these as performing, but this does not change the fact that the loans are uneconomic.

I would argue that China’s GDP is overstated by the value of these hidden losses, and over time these losses will be worked out. As long as bad loans (as I am defining them here) are increasing, it is pretty safe to assume that the gap between China’s real economic output and its recorded output is also increasing. This has been the problem with China’s growth of the last several years.

Beijing’s response is the economic reforms proposed during the Third Plenum, aimed at unlocking greater productivity potential in the Chinese economy and returning the country to a sustainable growth path. They will do this by improving the capital allocation process, so that capital will be diverted from SOEs, real estate developers, local governments and other inefficient users of capital, to SMEs, the agricultural sector, and more efficient users of capital. They will also eliminate constraints that prevent more productive use of resources, including weak legal enforcement of business claims, better protection of managerial and technological innovation, educational improvements, and so on.

The implementation of these reforms is not certain. There is likely to be tremendous political opposition for all the reasons I have discussed in the past three newsletters. But, even assuming they are forcefully implemented, the higher productivity resulting from the reforms will not lead to higher reported GDP growth. This is one of the great recent myths that, to me, make no sense at all. The higher productivity will not even allow China’s economy to continue growing at current rates. On the contrary, successful implementation of the reforms will cause GDP growth rates to drop sharply.

[Must Read: Dr. Jim Walker: No Chance of Soft Landing in China [1]]

There are at least four reasons to expect healthier but slower GDP growth over the rest of this decade if the reforms are implemented.

    1. Leverage boosts growth and deleverage reduces it. By now nearly everyone understands that China is over-reliant on credit to generate growth. Much new borrowing is needed simply to prevent borrowers from defaulting on existing loans, so that new lending can be divided into two buckets.

    One bucket consists of loans made to roll over the debt of borrowers who do not generate sufficient cashflow from the investments that their original loans funded. The loans in this bucket, of course, do not create additional economic activity, but as debt rises, financial distress costs rise with them (most financial distress costs, as is well understood in corporate finance theory, are a consequence of the way rising debt changes the incentive structures of the various stakeholders and so distorts their behavior in non-economic ways). Of course any disruption in lending would cause a surge in defaults.

    The second bucket consists of loans that fund new expenditures. These expenditures, of course, generate economic activity, but if they fund consumption, or if they fund investments the value of whose output is less than the cost of the inputs, they incur additional losses that must ultimately be rolled over by loans that belong in the first bucket. Any reduction in loan growth, in other words, is positive in the long term for Chinese wealth creation, but in the short term will either force the recognition of earlier losses or will reduce economic activity.

    Beijing has attempted since 2009-10 to rein in credit growth, but each time credit growth has decelerated, GDP growth rates – as we would expect – dropped so sharply that Beijing was quickly forced to relent. Because growth is more dependent than ever on credit, as Beijing finally acts to rein in credit growth decisively, GDP growth will drop sharply.

    2. Hidden transfers will be reduced. As I have discussed many times the investment-led model encourages investment by transfers – hidden or explicit – from the household sector to subsidize investment. In the Japanese version of this model, which very broadly is the version China and the Asian Tigers pursued, the main form of these transfers is the undervalued currency, low wage growth (relative to productivity growth) and, most of all, financial repression.

    Because these transfers no longer create net value on the investment side (China overinvests in infrastructure and has excess capacity in a broad range of manufacturing sectors), and the extent of the transfers are at the heart of China’s very low consumption level, the proposed reforms will act to reverse the mechanisms that goosed growth by transferring resources from the household sector to subsidize manufacturing, infrastructure building, and real estate development. These mechanisms put downward pressure on household income even as they subsidized manufacturing and investment and led directly both to higher growth rates and to the investment and consumption imbalances from which China suffers and which it plans to reverse.

    It should be clear that as Beijing reverses policies that once acted to increase growth, the result must be slower growth. It is hard to estimate the amount by which growth will decline once all the transfers are eliminated, but when one considers that the total amount of transfers to SOE’s during this century may exceed the aggregate profitability of the SOE sector by as much as five to ten times, it is pretty clear that their impact is likely to be substantial.

    3. Excess capacity will be resolved. Beijing recognizes that cheap credit and limited accountability have created excess capacity in industry and real estate. Why build so much excess capacity? Local governments have supported this build-up of capacity to boost growth and, with it, revenues and local employment, and because capital was essentially free (its real cost may have even been negative for much of this century) and because most projects are implicitly or explicitly guaranteed by local and central governments, there seemed to be no cost, and plenty of benefit, simply to pile on capacity.

    As Beijing acts to wring out excess capacity, we will inevitably see a reversal of the earlier growth impact. If building capacity generates economic activity (and it must have, or else why do it), closing down excess capacity must become a drag on growth.

    4. Losses will be recognized. As I discuss above, because many years of overinvestment have left a large amount of unrecognized bad debt on bank balance sheets, China’s GDP growth has been overstated by the amount of the unrecognized losses. Over the next decade as Beijing cleans up its financial system, this bad debt will either be explicitly recognized or, more likely, implicitly written off over the remaining life of the loan. Either way, as the losses are recognized, growth over the next several years will automatically be understated by the amount previously overstated.

These reforms, and others – like attempts to protect the environment — will ensure that even as China’s real economic productivity improves, its GDP growth numbers will drop as the reforms are implemented. For now most commentators argue that by increasing productivity, real reform will ensure a soft landing of GDP growth rates of 7-8 percent during the rest of President Xi Jinping’s administration. A growing minority worries, however, that rapidly rising debt will force China into a hard landing.
GDP Growth Is an Inverse Proxy for Reform

Although rising debt increases the probability of a hard landing, for now I expect neither outcome. More likely, I believe, is a “long landing”, during which growth rates will drop by roughly one to two percentage points every year for the rest of this decade. Implementing reforms will protect China from a hard landing. It will however force much lower, albeit healthier, growth rates.

In order to understand China’s growth prospects I think we must recognize that while a growth model can deliver healthy growth for many years, this growth can itself transform conditions to the point where the model is no longer able to deliver. At that point the economy must adjust to a new, more appropriate growth model.

The Chinese growth model is a version – in probably its most extreme form — of the investment-led growth model described by Alexander Gershenkron fifty years ago. To simplify tremendously, growth in “backward” economies is supported by policies that subsidize investment while suppressing consumption (usually by constraining household income growth). These “backward” economies are ones in which the level of capital stock is much lower than the country’s social and institutional ability to absorb investment efficiently.

Early on, many years of high investment allowed China to catch up. Once it did, however, continuing to invest in the same way and to the same degree was no longer wealth enhancing. At this point the economy needed institutional and social reforms to continue growing. The political logic of the system, however, forced, as it almost always does, continued high investment growth and, with it, increasing investment misallocation.

With this almost by definition debt began to rise faster than debt servicing capacity. This, clearly, was unsustainable, but of course it can go on for many years. It was as long ago as 2007 that former Premier Wen described the Chinese economy as “unsteady, unbalanced, uncoordinated and unsustainable”, but it proved politically very difficult for Beijing to implement the reforms his advisors suggested, and so the distortions associated with the growth model continued.

Debt surged even as the consumption imbalance deteriorated until late 2011. We have only seen in 2012-13 the beginning of any partial rebalancing, although during this time there has been at best only a deceleration in the growth rate of credit.

And yet the minimal amount of rebalancing that has occurred in the past three years has already lopped three percentage points off China’s GDP growth rate, just as we predicted. China still has a long way to go to rebalance its economy. By my calculations consumption growth must outpace GDP growth by 3-4 percentage points every year for at least a decade just to allow China to raise the household consumption share of GDP to a still-low 50 percent.

The proposed reforms will certainly unleash greater productivity, but they will also eliminate the very mechanisms that had previously turbo-charged economic activity and which showed up in the form of higher reported GDP growth rates. They will cause a sharp deceleration in economic activity even though growth will be more productive than in the past. The fact that growth rates have dropped by almost a third even before the reforms were implemented suggests to me just how much further they must drop.

This is an abbreviated version of the newsletter that went out three weeks ago.  Academics, journalists, and government and NGO officials who want to subscribe to the newsletter should write to me at chinfinpettis @ yahoo.com, stating your affiliation, please.  Investors who want to buy a subscription should write to me, also at that address.

Michael Pettis
Senior Associate at Carnegie Endowment for International Peace
http://mpettis.com (http://mpettis.com)

http://feedproxy.google.com/~r/fso/~3/-MKt9q7IAgY/case-for-china-s-long-landing-of-much-slower-but-healthier-growth (http://feedproxy.google.com/~r/fso/~3/-MKt9q7IAgY/case-for-china-s-long-landing-of-much-slower-but-healthier-growth)   :icon_study:


Title: Re: Official Chinese Toast Thread
Post by: steve from virginia on January 30, 2014, 09:05:51 PM

It's hard to know where to start.

Pettis should know better and he probably does. He just peddles mush and hopes nobody notices.

Quote
"Because these transfers no longer create net value on the investment side (China overinvests in infrastructure and has excess capacity in a broad range of manufacturing sectors), and the extent of the transfers are at the heart of China’s very low consumption level, the proposed reforms will act to reverse the mechanisms that goosed growth by transferring resources from the household sector to subsidize manufacturing, infrastructure building, and real estate development. These mechanisms put downward pressure on household income even as they subsidized manufacturing and investment and led directly both to higher growth rates and to the investment and consumption imbalances from which China suffers and which it plans to reverse."

So, consumption creates value? Only an economist can come up with such nonsense.

Pettis suggests that individual Chinese should waste money and resources in the place of Chinese companies. Q: Who is buying the millions of empty apartments in China if not individual Chinese?

What will the citizens buy (cars, TVs and golf clubs) that the businesses haven't bought already (trucks, ports and highways) in some other form? Where is the value? Where is the money return?

For the Chinese to consume more, they must produce less, that means the US must also consume less. Pettis doesn't understand that the US is indeed consuming less -- see 'Best Buy declining purchasing power'. (http://{http://www.salon.com/2014/01/25/the_story_of_best_buy_is_a_scary_predictor_for_the_u_s_economy_partner/}) China's trade surplus is shrinking, there is less cash-credit flows into China = less purchasing power. China faces a currency crisis that is not much different from that in Japan ... or Argentina! China is a bigger country, but there is more to lose, more of a height from which to fall.

Waste is waste, no matter who does it, the real reform is to bring an end to it all before an end is brought to it by the force of events. China cannot be 'like' the US any more than Sri Lanka can be like the US.

From here on, the US cannot be itself any longer, such a state of affairs is unaffordable.

Title: Official Chinese Toast Thread:Trusts Go BUST in China
Post by: RE on February 20, 2014, 12:08:30 AM
So how many can the PBoC Bail Out here?  From Zero Hedge (http://www.zerohedge.com/news/2014-02-19/chinese-dominoes-are-about-fall-complete-list-upcoming-trust-defaults).

RE

The Chinese Dominoes Are About To Fall: Complete List Of Upcoming Trust Defaults

Tyler Durden's picture





 

 

As has been widely reported on these pages in the past month, after a near-reality experience almost claimed the first material Chinese shadow banking default, the Chinese government and central bank did what they do best: a mysterious "white knight" emerged out of nowhere, and bailed out the Credit Equals Gold #1 Trust. A few days later, we reported that China Development Bank lent 2 billion yuan to coal company Shanxi Liansheng, which owes almost 30b yuan to lenders including banks, trusts and asset management firms. And while we know how "difficult" it was for China to do the wrong thing and encourage moral hazard, despite repeated assurances by one after another PBOC director that this time the central bank means business, we have good news: these two narrowly averted Trust defaults are just the beginning - it is all downhill from here.

As Bank of America reports in an analysis by David Cui, the Trust defaults are about to get hot and heavy. To wit:

We believe that during April to July the market may see many trust products threatening to default, especially those related to coal mines. By our estimate, the first real default most likely could happen in May with a Sichuan lead/zinc trust product worth Rmb140mn. This is because the product is relatively small (so the government may use it as a test case), the underlying asset is not attractive (so little chance of 3rd parties taking it over) and we also have heard very little on parties involved trying to work things out. Whether this will trigger an avalanche of future trust defaults remains to be seen and this presents a key risk to the market in our opinion.

 

... it’s still possible that many of the upcoming cases in Apr-July may get worked out one way or the other. Nevertheless, as we believe that many of the underlying assets of the trust products are insolvent, it’s a matter of time that many products will ultimately default, in our view. Various bail-outs will only delay the inevitable.

From BofA's David Cui

12 potential defaults reported by the media

Table 1 summarizes the information on the 12 major potential defaults in the trust industry that have been reported by the media. Most of them are coal mine related and heavily concentrated in one area, Shanxi Province. So far it seems to us that most of them may get extended upon the due date. The only exception over the next few months appears to be a product issued by China Credit Trust for a lead and zinc miner in Sichuan, Nonggeshan. Even without any major default over the next few months, the process of debt restructuring can be messy and weigh heavily on market sentiment.

19 Feb 2014, Rmb109mn borrowed by Liansheng & arranged by Jilin Trust

(Shanghai Securities News, 2/11; Economic Information, 2/13)

21 Feb 2014, Rmb500mn borrowed by Liansheng & arranged by Shanxi Trust

(Caiing 1/27; China Securities Journal, 1/27; 21st Century Business Herald, 2/14)

07 Mar 2014, Rmb664mn borrowed by Liansheng & arranged by Changan Trust

(Caiing 1/27; China Securities Journal, 1/27; 21st Century Business Herald, 2/14)

31 Mar 2014, Rmb196mn borrowed by Magic Property & arranged by CITIC Trust

(Source: Financial Planning Weekly, 3/6/2013; Guangzhou Daily, 4/6/2013, Boxun, 5/10/2013)

14 May 2014, Rmb1.5bn borrowed by Liansheng & arranged by China Jiangxi International Trust

(Caiing 1/27; China Securities Journal, 1/27; 21st Century Business Herald, 2/14)

30 May 2014, Rmb140mn borrowed by Nonggeshan & arranged by China Credit Trust

(Source: 21st Century Business Herald, 31/7/2012; Caiing, 1/27)

25 Jul 2014, Rmb1.3bn borrowed by Xinbeifang & arranged by China Credit Trust

(Source: China Securities Journal, 1/15)

27 Jul 2014, Rmb319mn borrowed by Hongsheng & arranged by Huarong Trust

(21st Century Business Herald, 20/12/2013)

7 Sept 2014: Rmb400mn borrowed by Zengdai & arranged by CCB Trust

(Source: Securities Daily, 9/7/2013; CCB Trust)

20 Nov 2014, Rmb600mn borrowed by Liansheng & arranged by China Jiangxi Int'l Trust

(Caiing 1/27; China Securities Journal, 1/27; 21st Century Business Herald, 2/14)

23 Dec2014: Rmb1.1bn borrowed by Xiaoyi Dewei & arranged by China Resources Trust

(Source: Financial Planning Weekly, 11 Nov 2013)

15 Jan 2015, Rmb1.2bn borrowed by Hongsheng’s owner & arranged by Minmetals Trust

(21st Century Business Herald, 20/12/2013)

2Q/3Q 2014 – the next peak maturing period for collective trusts

We consider the trust market the most vulnerable part of the major financing channels for companies, i.e. loan, corporate bond and trust. The quality of the borrowers in the trust market tends to among the lowest. Within the trust market, collective trust products, i.e. those sold to more than one investor, tend to be risker than single trust products, i.e. those sold to a single investor. This is because investors in single trust products tend to be more substantial in resources, thus most likely more sophisticated in their risk control.

The Wind database lists close to 12,000 collective trust products, worth Rmb1.34tr, which cover roughly half of the collective trust market (Rmb2.72tr as of the end of 2013). It has reasonably good quality data series on the issuing dates and amounts raised. However, data on maturing dates are sporadic. We estimate that the average duration of the trust products is around 2 years. Based on this assumption and the issuing dates, we have mapped out a rough maturing profile of the collective trust market. As we can see from Chart 1, 2Q and 3Q this year will be the next peak maturing period for this market.

Coal mine trusts maturity schedule

We went through the offering documents of the top 200 collective trust products by size (the smallest being Rmb400mn), worth some Rmb145bn in total. They represent roughly 10% of the trust products in the Wind database and 5% of the overall collective trust market. We identified the industries of the issuers, the regions where their businesses are located and the maturity dates of the products. Table 2 summarizes the results.

We believe that coal mine trusts are the most likely to default over the coming months because 1) coal price has dropped sharply in recent quarters; 2) most of the issuers are private enterprises; and 3) they tend to be from provinces whose governments rely heavily on resources related income, e.g., Shanxi and Inner Mongolia. On the other hand, the property market has been reasonably buoyant in recent times while LGFVs generally have access to re-financing until the implicit guarantee is removed (a whole different topic worthy another report later). Based on the maturing schedule of the top 200 collective trust products, we expect more noise about coal mine trust defaults around Apr, June and July (Chart 2).

Table 3 lists the coal mine trust products that are in our study.

For the trust market, we only have data on approximately half of the collective trust market, which in turn, accounts for about a quarter of the overall trust market. So essentially, we only covered about 1/8 of the total trust market with our analysis. Single trusts are less risky than collective trusts. Nevertheless, if the solvency issue is a systemic problem as we expect, many single trusts will ultimately default by our assessment.

Our analysis has largely zoomed in on coal mine trusts because they represent the clear and present danger given how depressed the coal market has been. However, property related trusts may come under increasing pressure as we sense that the property market may be turning south in small cities. As a result, some of those related products may threaten to default reasonably soon. Then we have the big unknown – LGFV trusts. Whether and when they may default is largely a political decision in our opinion.

Title: Chinese Toast: Expelling the Pig in the Python
Post by: RE on February 21, 2014, 11:46:59 PM
"The Pig In The Python Is About To Be Expelled": A Walk Thru Of China's Hard Landing, And The Upcoming Global Harder Reset (http://www.zerohedge.com/news/2014-02-20/pig-python-about-be-expelled-walk-thru-chinas-hard-landing-and-coming-global-hard-re)

Submitted by Tyler Durden on 02/21/2014 09:37 -0500

By now everyone knows that the Chinese credit bubble has hit unprecedented proportions. If they don't, we remind them with the following chart of total bank "assets" (read debt) added since the collapse of Lehman: China literally puts the US to shame, where in addition to everything, the only actual source of incremental credit growth over the same time period has been the Fed as banks have used reserves as margin for risk purchases instead of lending. 

 

Everyone should also know that like a metastatic cancer, the amount of non-performing, bad loans within the Chinese financial system is growing at an exponential pace.

 

Finally, what everyone learned over the past month, is that as the two massive, and unresolvable forces, come to a head, the first cracks in the facade are starting to appear as first one then another shadow-banking Trust product failed and had to be bailed out in the last minute.

However, as we showed last week, and then again last night, the default party in China is only just beginning as Trust failures in the coming months are set to accelerate at a breakneck pace.

 

The $64K question is will the various forms of government be able to intercept and bail these out in time, as they have been doing so far despite their hollow promises of cracking down on moral hazard: after all, everyone certainly knows what happened when Lehman was allowed to meet its destiny without a bailout - to say that the CNY10 trillion Chinese shadow banking industry will not have far more dire consequences if allowed to fall without government support is simply idiotic.

But what could be the catalyst for this outcome which inevitably would unleash the long-overdue Chinese hard landing, and with it, a new global depression?

Ironically, the culprit may be none other than the Fed with the recently instituted taper, and the gradual, at first, then quite rapid unwind of the global carry trade.

Bank of America explains:

 
 

QE and the Emerging Markets carry trade

 

The QE channel has worked through Emerging Markets and China is a key vehicle. By lowering the US government bond yields to a bare minimum, and zero –ish at the short end, a search for yield globally ensued. Emerging market banks and corporates have gone on an international leverage binge, yet another carry trade, the third in 20 years. The first one was driven by European banks, financing East Asian capex – that ended in 1997. The second one was global banks and equity-FDI supporting mainly capex in the BRICs. That ended in 2008. This time, it is increasingly non-equity: commercial banks and more importantly, the bond market – often undercounted in the BoP and external debt statistics that conventional analysis looks at.

 

Chart 9 shows the rise of EM external loans and bond issuance (both by residence and nationality). Since, end-3Q2008 to end-3Q2013, external borrowing from banks and bonds has risen USD1.9tn. Bank loans have risen by USD855bn and bond issuance in foreign currencies by nationality is up USD1,042bn. In the prior five-year period (i.e. end-3Q2003 – end-3Q2008), forex bond issuance rose only USD432bn. Clearly, the importance of external bond issuance is rising. See Table 5 for details.

 

In China, since, end-3Q2008 to end-3Q2013, outstanding external borrowing from banks and bonds has gone from USD207bn to USD849n – a net rise of USD655bn. Outstanding bank loans are up from USD161bn to USD609bn – a net rise of USD464bn. Bond issuance in foreign currencies by nationality is up from USD46bn to USD240bn – a net rise of USD191bn. In the prior five-year period (ie, end-3Q2003 – end-3Q2008), forex bond issuance rose only USD28bn in China. Clearly, the importance of external bond issuance is rising in China.

 

 

There is more to this story.

 

As mentioned earlier, for externally-issued bonds, USD1,042bn has been raised by the nationality of the EM borrower since end-3Q 2008, but USD724bn by residence of the borrower – a gap of USD318bn, or 44%. This undercount is USD165bn in China, USD100bn in Brazil, USD62bn in Russia, and USD37bn in India. The carry trade this time around was helped substantially by access to the bond market, especially from overseas affiliates of EM banks and corporations.

 

There are a lot of moving parts in the balance of payments that finally affect the change in international reserves at any EM central bank – eg, the current account, portfolio equity investment and direct equity investment, and debt flows – both from the bond market and lending from banks. We focus on the link between these debt flows and the international reserves in China. As Table 5 below shows, China’s external debt – from bond issuance and forex borrowing from banks – rose USD655bn during 3Q08-3013.

 

 

We posit that this large rise was in part driven by the carry trade offered up by QE – China banks and corporates issued substantial forex-denominated bonds, and borrowed straight loans from international banks. We recognize the caveat that correlation does not imply causation. The USD655bn rise in China debt issuance is highly correlated to the Fed’s balance sheet since late-2008. As Chart 11 shows, the rise in China debt issuance of USD 655bn has (along with FDI and the C/A surplus), boosted international reserves by USD1,773bn since late-2008. Also, as Chart 11 shows, the USD1,773bn rise in China international reserves mirrors the rise of USD2,585bn in the EM monetary base. Lastly, the rise of China’s monetary base of USD2,585bn correlates well with the USD10.9tr rise in China’s broad money expansion.

 

 

 

As the Fed tapers, and the size of its balance sheet stabilizes/contracts, we should expect this sequence to reverse. Confidence is a fragile membrane. Not only does the Fed’s balance sheet matter as a source of funds, but we believe so does the attractiveness of the recipient of the carry trade – and the trust in its collateral. As Gary Gorton puts it...

 

 
 

The output of banks is money, in the form of short-term debt which is used to store value or used as a transaction medium. Such money is backed by a portfolio of bank loans in the case of demand deposits, or by collateral in the form of a specific bond in the case of repo. The backing is designed to make the bank debt as close to riskless as possible — in fact, so close to riskless than nobody wants to really do any due diligence on the money, just transact with it. But the private sector cannot produce riskless debt and so it can happen that the backing collateral is questioned. This typically happens at the peak of the business cycle. If its value is questioned, it loses its “moneyness” so no one wants it, and cash is preferred. But as we know, if everyone wants their cash at the same moment, their demands cannot be satisfied. In this sense, the financial system is insolvent. (interview with the FT) 

 

What makes sense for an individual carry trade - borrow low, invest at higher rates - falls prey to the fallacy of composition, when too many engage in the same carry trade. And eventually question the underlying collateral, now huge, and potentially suspect. China is a case in point. If our colleagues David Cui and Bin Gao are right, the trust sector in China could create rollover risks that reverse a gluttonous carry trade within China, but partly financed overseas. In China's case, this trade was between low global interest rates, low Chinese deposit rates, expectations of perpetual RMB appreciation on the one hand, and higher investment returns promised by Trusts on the other. A part of the debt funds raised overseas, we suspect were put to work in this Trust carry trade. The HK-based banks are big participants in intermediating the China carry trade - as Chart 12 shows, their net lending to China went from 18% of HK GDP in 2007 to 148% in late-2013.

 

There are always fancy names given to carry trades – financial liberalization of capital accounts, the Bangkok International Banking Facility, currency internationalization, etc. We remain skeptics of these buzzwords.

 

 

 

The potential consequences of Trust defaults and a China carry trade unwind

 

1. If the EM carry trade diminishes as a consequence of a changed Fed policy and/or less attractive risk-adjusted returns in EMs as collateral quality is questioned, the sources of China’s forex reserve accumulation will need to change. Perhaps to bigger current account surpluses, more equity FDI and portfolio investment through privatization and more open equity markets. If that does not happen, expanding the Chinese monetary base might require PBOC to increase net lending to the financial system and/or monetize fiscal deficits (this last part has not worked so well in EMs).

 

2. Potential asset deflation is a risk, as the carry trades diminish/unwind. Property prices are at risk – the collateral value for China’s financial systems. This is not a dire projection – it simply seeks to isolate the US QE as a key driver of China’s monetary policy and asset inflation, and highlights the magnitudes involved, and the transmission mechanism. Investors should not imbue stock-price movements and property price inflation in China with too much local flavor – this is mainly a US QE-driven story, in our view.

 

3. Currently, China’s real effective exchange rate is one of the strongest in the world. Concerns about China’s Trust sector, and its underlying collateral value, sees some of this carry trade unwound, the RMB could be under pressure.

 

 

4. Given HK’s role in the China carry trade, HK property prices and its banking system should be watched carefully for signs of stress.

 

5. UK, US, and Japan banking systems have been active lenders to China since QE. They should be on watch if the Trust rollover risk materializes and creates a growth shock in China. See Chart 15.

 

 

 

6. Safe haven bids for DM government bonds, overseas property and precious metals might emerge from China.

 

Could the party go on? Yes, if for some reason a significant deterioration in the US labor market, or a deflationary shock from China, or any other surprise that could lead to a cessation of the US tapering could prolong this carry trade. This is not the house base case. We believe it is better to start preparing for a post-QE world. As one of our smartest clients told us: “the main theme in the past five years was QE. If that is coming to an end, investments and themes that worked in the past five years must therefore be questioned.” We agree.

* * *

Yes, Bank of America said all of the above - every brutally honest last word of it.

The question, however, in addition to "why", is whether the Fed also agrees with BofA's stunningly frank, and quite disturbing conclusion, perhaps finally realizing that aside from the US, the biggest house of cards that would topple once the "flow"-free emperor is exposed in his nudity, is that of the world's largest "growth" (and credit) dynamo of the past two decades - China. Because, as noted above, if Lehman's collapse was bad, a deflationary collapse brought on by Chinese hard landing coupled with a full unwind of the global carry trade, would be disastrous and send the world into a depression the likes of which have never before been seen.

Finally, for those who want the blow by blow, here is BofA's tentative take of what the preliminary steps of the next global great depression will look like:

 
 

If we do experience a sizable default, the knee-jerk market reaction will be cash hoarding since it will strike as a big surprise. Thus, we expect the repo rate to rise first, while the long term government bond would get bid due to risk aversion flows.

 

However, what follows will be quite uncertain, aside from PBoC injecting liquidity and easing monetary policy to help short term rate come down. It has been proven again and again the Chinese government will get involved and be proactive. The bond market reaction will be different depending on the government solution.

Alas, at that point, not even the world's largest bazooka will be enough.

At this point one should conclude that reality - through massive, unprecedented liquidity injections - has been deferred long enough. It is time to let the markets finally return to some semblance of uncentrally-planned normalcy: there is a reason why nature abhors a vacuum. Even if it means the eruption of the very painful grand reset, washing away decades of capital misallocation, lies and ill-gotten wealth, so very overdue.

Title: Re: Official Chinese Toast Thread
Post by: JoeP on March 07, 2014, 05:33:49 PM
Is this the start of a BIGTIME DOMINO DOOM DEFAULT EVENT or a BIG PFFFT? I linked Yves article because I think she made a good assessment of the situation. Reminds me of the Euro Debt CRISIS.  TPTB "contained" it - just fucking look at the bond yields today vs "crisis time". On top of that, Bill Gross is BUYING euro debt??? Not saying I approve of what was "agreed to" but it sure worked short-term wonders. The situation did not turn into a "Lehman event". I seem to remember Ashvin taking a "lighter" Doom stance after the euro debt crisis was contained and I have to wonder if the timing was just a coincidence.

Chinese Bond Default Rattles Markets; Harbinger of More Credit Woes? (http://www.nakedcapitalism.com/2014/03/chinese-bond-default-rattles-markets-harbinger-credit-woes.html)
Title: Official Chinese Toast Thread: T-Minus 10 Seconds and Counting...
Post by: RE on March 08, 2014, 01:35:28 AM
(http://stream1.gifsoup.com/view2/1660516/nuclear-explosion-o.gif)
When this one BLOWS, it is Tsar Bomba Time in the Financial World.  From Zero Hedge/George Washinton (http://www.zerohedge.com/contributed/2014-03-07/china-crashing-%E2%80%A6-predicted)

RE

China Is Crashing … As Predicted

George Washington's picture





 

 

The head of China’s sovereign wealth fund noted in 2009: “both China and America are addressing bubbles by creating more bubbles”.

He’s right …

Global credit excess is worse than before the 2008 crash.

The U.S. and Japan have been easing like crazy, but – as Zero Hedge notes  [if you missed it when Tyler Durden first posted this] – China has been much worse:

 Here is just the change in the past five years:

You read that right: in the past five years the total assets on US bank books have risen by a paltry $2.1 trillion while over the same period, Chinese bank assets have exploded by an unprecedented $15.4 trillion hitting a gargantuan CNY147 trillion or an epic $24 trillion – some two and a half times the GDP of China!

 

Putting the rate of change in perspective, while the Fed was actively pumping $85 billion per month into US banks for a total of $1 trillion each year, in just the trailing 12 months ended September 30, Chinese bank assets grew by a mind-blowing $3.6 trillion!

 

Here is how Diapason’s Sean Corrigan observed this epic imbalance in liquidity creation:

Total Chinese banking assets currently stand at some CNY147 trillion, around 2 ½ times GDP. As such, they have doubled in the past four years of increasingly misplaced investment and frantic real estate speculation, adding the equivalent of 140% of average GDP – or, in dollars, $12.5 trillion – to the books. For comparison, over the same period, US banks have added just less than $700 billion, 4.4% of average GDP, 18 times less than their Chinese counterparts – and this in a period when the predominant trend has been for the latter to do whatever it takes to keep commitments off their balance sheets and lurking in the ‘shadows’!

Indeed, the increase in Chinese bank assets during that breakneck quadrennium is equal to no less than seven-eighths of the total outstanding assets of all FDIC-insured institutions! It also compares to 30% of Eurozone bank assets.

Truly epic flow numbers, and just as unsustainable in the longer-run.

And here:

So what’s the problem?

Well, the world’s most prestigious financial agency – the central banks’ central bank, called the Bank of International Settlements or “BIS”  –  has long criticized the Fed and other central banks for blowing bubbles.  The World Bank and top economists agree.  So do many others.

As such, it was easy for us to predict a crash in China when the bubble collapses.

We argued in 2009 that China’s period of easy credit was analogous to America’s monetary easing starting in 2001 … and Rome’s in 11 B.C.

We noted in 2009 and against in 2011 that China is suffering from a lot of the same malaises as the American economy, including corruption, crony capitalism, and failure to disclose bad debt.

In 2010, we asked “When Will China’s Bubble Burst?

China’s $23 Trillion Dollar Credit Bubble Is Bursting

International Business Times noted last year that China’s debt-laden steel industry was on the verge of bankruptcy.

Quartz reported in December that a huge coal company called Liansheng Resources Group declared bankruptcy with 30 billion yuan ($5 billion) in debt.

Chinese Business Wisdom argues (via China Gaze) that waves of bankruptcies are striking in 10 Chinese industries: (1) shipbuilding; (2) iron and steel: (3) LED lighting; (4) furniture; (5) real estate development; (6) cargo shipping; (7) trust and financial institutions; (8) financial management; (9) private equity; and (10) group buying.

AP notes today:

Chinese authorities have allowed the country’s first corporate bond default, inflicting losses on small investors in a painful step toward making its financial system more market-oriented.

 

A Shanghai manufacturer of solar panels paid only part of 90 million yuan ($15 million) in interest [it owed] …

 

Until now, Beijing has bailed out troubled companies to preserve confidence in its credit markets. But the ruling Communist Party has pledged to make the economy more productive by allowing market forces a bigger role.

Time asks whether China has reached its “Bear Stearns moment”:

A dangerous build-up of debt and an explosion of risky and poorly regulated shadow banking have raised serious concerns about the health of China’s economy. That’s why the Chaori default — the first ever in China’s domestic corporate bond market — has sparked fears that the country could be headed for a full-blown economic crisis like the one that slammed Wall Street in 2008. “We believe that the market will have reached the Bear Stearns stage,” warned strategist David Cui and his team at Bank of America-Merrill Lynch in a report to investors.

 

The concern of Cui and others is that the Chaori default will be the tip-off point for an unravelling of China’s financial system. The default could wake investors and bankers to the realization that companies they thought were safe bets are potentially not, and they could begin to reassess other loans and investments to other corporations. In other words, they might start redefining what is and is not risky. That could then lead to a credit crunch, when nervous bankers become wary of lending money, or lending at affordable interest rates. More bankruptcies could result. That eventually causes the financial markets to lock up — and we end up transitioning from a Bear Stearns moment to a Lehman Brothers moment, when the financial sector melts down. “We think the chain reaction will probably start,” Cui wrote. “In the U.S., it took about a year to reach the Lehman stage when the market panicked … We assess that it may take less time in China.”

The Financial Post reported in January:

The U.S. and Europe learned the hard way about the dangers of shadow banks in the financial crisis but, five years later, China appears set to get its own painful lesson about what can happen when large capital flows get diverted to unregulated corners of the financial system.

 

***

 

“We estimate that 88% of the revenues of Chinese trust companies is at risk in the long term,” said McKinsey and Ping An.

 

***

Billionaire investor George Soros recently wrote on a popular news website that the impending default and the growing fear reflected in Chinese markets has “eerie resemblances” to the global crisis of 2008.

The big picture:  the $23 trillion dollar Chinese credit bubble is starting to collapse.

As Michael Snyder wrote in January:

It could be a “Lehman Brothers moment” for Asia.  And since the global financial system is more interconnected today than ever before, that would be very bad news for the United States as well.  Since Lehman Brothers collapsed in 2008, the level of private domestic credit in China has risen from $9 trillion to an astounding $23 trillion.  That is an increase of $14 trillion in just a little bit more than 5 years.  Much of that “hot money” has flowed into stocks, bonds and real estate in the United States.  So what do you think is going to happen when that bubble collapses?

 

The bubble of private debt that we have seen inflate in China since the Lehman crisis is unlike anything that the world has ever seen.  Never before has so much private debt been accumulated in such a short period of time.  [Note: Private debt is much more dangerous than public debt.] All of this debt has helped fuel tremendous economic growth in China, but now a whole bunch of Chinese companies are realizing that they have gotten in way, way over their heads.  In fact, it is being projected that Chinese companies will pay out the equivalent of approximately a trillion dollars in interest payments this year alone.  That is more than twice the amount that the U.S. government will pay in interest in 2014.

 

***

 

As the Telegraph pointed out a while back, the Chinese have essentially “replicated the entire U.S. commercial banking system” in just five years…

Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. “They have replicated the entire U.S. commercial banking system in five years,” she said.

 

The ratio of credit to GDP has jumped by 75 percentage points to 200pc of GDP, compared to roughly 40 points in the US over five years leading up to the subprime bubble, or in Japan before the Nikkei bubble burst in 1990. “This is beyond anything we have ever seen before in a large economy. We don’t know how this will play out. The next six months will be crucial,” she said.

As with all other things in the financial world, what goes up must eventually come down.

 

***

 

The big underlying problem is the fact that private debt and the money supply have both been growing far too rapidly in China. 

 

According to Forbes, M2 in China increased by 13.6 percent last year…

And at the same time China’s money supply and credit are still expanding.  Last year, the closely watched M2 increased by only 13.6%, down from 2012’s 13.8% growth.  Optimists say China is getting its credit addiction under control, but that’s not correct.  In fact, credit expanded by at least 20% last year as money poured into new channels not measured by traditional statistics.

Overall, M2 in China is up by about 1000 percent since 1999.  That is absolutely insane.

 

***

 

But I am not the only one talking about it.

 

In fact, the World Economic Forum is warning about the exact same thing…

Fiscal crises triggered by ballooning debt levels in advanced economies pose the biggest threat to the global economy in 2014, a report by the World Economic Forum has warned.

***

 

What has been going on in the global financial system is completely and totally unsustainable, and it is inevitable that it is all going to come horribly crashing down at some point during the next few years.

 

It is just a matter of time.

Title: Re: Official Chinese Toast Thread
Post by: Surly1 on March 08, 2014, 05:27:03 AM
I found this one last night and posted on the DDFB site. It is genuinely hard to imagine a scenario which does not end in generalized war as a means to "reset" all this indebtedness.

Much in the same way 9-11 put an end to any problems associated with the Pentagon's missing $2T.
Title: Re: Official Chinese Toast Thread
Post by: Eddie on March 08, 2014, 10:32:29 AM
Any chance China has a return to hard core communism when the money bubble goes poof? I'm thinking another Cultural Revolution.

When pendulums swing widely in one direction, sometimes they swing back.
Title: Re: Official Chinese Toast Thread
Post by: Ka on March 08, 2014, 12:36:19 PM
Any chance China has a return to hard core communism when the money bubble goes poof? I'm thinking another Cultural Revolution.

When pendulums swing widely in one direction, sometimes they swing back.

i would think the Chinese middle class is too big for that to happen. When all they will want is a return to what they had, I doubt a movement to turn them all into farmers and proles will succeed as a movement. It may happen because there isn't anything else for them to be (other than dead), but I would think if the Party tried to make it happen, it is the Party that would disappear first.
Title: Re: Official Chinese Toast Thread
Post by: JoeP on March 08, 2014, 06:02:05 PM
Any chance China has a return to hard core communism when the money bubble goes poof? I'm thinking another Cultural Revolution.

When pendulums swing widely in one direction, sometimes they swing back.

i would think the Chinese middle class is too big for that to happen. When all they will want is a return to what they had, I doubt a movement to turn them all into farmers and proles will succeed as a movement. It may happen because there isn't anything else for them to be (other than dead), but I would think if the Party tried to make it happen, it is the Party that would disappear first.

I share your doubts. Very provocative post.  :emthup:
Title: Re: Official Chinese Toast Thread
Post by: JoeP on March 09, 2014, 03:40:10 PM
If you are skeptical of the idea that China has a "monstrous" real estate bubble, you might want to click here (http://www.zerohedge.com/news/2014-03-09/prem-watsas-9-observations-why-there-monstrous-real-estate-bubble-china-which-could-)
Title: Re: Official Chinese Toast Thread
Post by: RE on March 10, 2014, 02:33:08 AM
New Stanza:

"When China Blows
The Whole Ball of Wax Goes
Everybody Knows"

Look Out Below

(http://dubsism.files.wordpress.com/2010/08/wile-e-coyote-falling-off-cliff.jpg)

RE

Celebrating China's First Bond Default: Copper Limit Down, Yuan Crashes Most In Six Years

Tyler Durden's picture





 

 

It would appear the fecal matter is starting to come into contact with the rotating object in China. Worrying headlines are beginning to mount on the back of real economic events (an actual default and a collapse in exports):

Aside from that Iron ore prices are crumbling, Asian stocks are dropping, Chinese corporate bond prices aee falling at their fastest pace in almost 4 months, and all this as 7-day repo drops to one-year lows (as banks hoard liquidity).

 

Item #1: The forced unwind of massive rehypothecated copper lots related to concerns over shadow-banking defaults sparked by the fact that Chaori was allowed to actually default...

 

Pushing Shanghai copper limit down...

 

Item #2: Iron Ore prices collapsing for similar reasons (as borrowers rotated to Steel and by-products for collateral on their shadow bank lending facilities)...

 

Item #3: Corporate bond prices are dropping at their fastest in 4 months...

 

Item #4: Repo rates are at near-record lows as banks hoard liquidity...

 

Item #5: USDCNY is tumbling as PBOC efforts to unwind the massvley one-sided carry trade appear to be getting out of control...

 

Item #6: AsiaPac stocks are down by their most in almost 6 weeks...

 

Item #7: Even US equity futures are unhappy (with JPY carry having caught up and now dumping again)...

 

Bonus Item: Copper-to-Gold ratios are collapsing...

 

Charts: Bloomberg

Title: SHOWTIME!
Post by: RE on March 10, 2014, 03:41:03 AM
Besides the fact today looks like one of those good "short the phone book" opportunities, I figured I would muse a little about the impending Collapse of the Chinese Bubble.

The stories are coming out so fast and furious now that it seems like about everyone expects the China Bubble to finally pop here.  When everybody expects something to occur, it usually gets "priced in" to the market.  In other words, all the Hedge Funds cut their exposure to whatever is being priced in.  Question is, can you Price In a China Bubble collapse?

We all know a few things.  First off, that the Chinese Credit Market has ballooned up so big so fast it makes Helicopter Ben's QE and Abenomics look like Kindergarten stuff.  Every sector of the market has been affected, with rampant specualtion in everything from Real Estate to Copper, and of course to Gold also which the Chinese have been hording and importing by the Boatload.  Essentially, the Chinese ARE the market for commodities, since this is where much of the world Industrial capacity is now.  If the Chinese don't buy it, who will, and with what money?

Second, we also know Da Fed has been pumping liquidity into the TBTF Banks, and most of this money has Gone East in search of Yield as the Bubble over there expanded.  The Prop Desks at Goldman and JP Morgan might WANT to decrease their exposure, but how can you unwind in a few weeks even what you have spent the better part of the last 5 years winding up?

Given this state of affairs, one has to expect that a Chinese Bubble Collapse is not something anybody can hide from or hedge against.  If these folks are writing Insurance Policies (Credit Default Swaps) against such an occurrence, whoever wrote the policy would have to pay off basically in the $Trillions$, which of course they don't really have.

Besides CDS being likely very ineffective here (at best, at worst they will blow it up worse), it also seems unlikely Da Fed or the PBoC could do much either.  Both CBs have essentially shot their wad in blowing this bubble to begin with, so exactly how they could stop a cascade collapse in the Chinese markets simply by pitching still more paper at them is very tough to figure.

So, what does a collapse of the Chinese Bubble look like?  Basically like Lehman on Steroids of course.  The TBTF Banks involved all owe each other many multiples of money they actually have, through rehypothecation of all these assets on their books.  If/When these assets are marked to market, balance  sheets go completely in the Crapper, but still worse than that is they can't repo or collect on virtually anything here.  The Daisy Chain of loans is so complex it will take years of Legal finagling to sort out who owns what of whatever is left in the smoking pile of rubbish, and in the meantime nobody trusts anybody else, no loans are made, LIQUIDITY LOCKUP!

Since about everything is priced out in Dollars, they are going to be at a major Premium here.  Everyone will scramble to sell whatever they can in return for precious Toilet Paper.  That should produce a rapid deflationary event in most items you might buy, with the possible exception of food because that also appears to be running more scarce these days.  Energy however would deflate, since the Chinese would not be buying, but rather just selling whatever Inventory they have at Rock Bottom prices.  Could be a great Buying Opportunity at Walmart for preps, at least till the inventory sells out.

Less clear here is what occurs to the Digibits sitting in your Bank Account.  Will now Blatantly Insolvent Banks withhold these funds from the Depositors?  The Cyprus example indicates that would be a possible scenario.  The other one is that the FDIC ponies up money they don't have either to pay off depositors, but that could only be done by Naked Printing, which so far has not been a choice made in the major currencies.

In any event, the Chinese Credit Market is the Black Swan Circling here even more than Ukraine, though of course tha also is quite big on the Geopolitical level.  That also is not a problem that had to be dealt with during the Lehman collapse, at the time there was relative Stability between the Ruskies and NATO.  5 years later, basically everyone is at each other's throats here already.  The Chinese and Japanese also are at each other's throats over the South China Sea.  So a blow up in the Chinese Credit market likely pushes one or more of these conflicts over the edge.

The outcome of all of it seems clear, World War.  How that will be engaged precisely remains to be seen, as nobody really can afford it and once it gets underway accessing the energy to continue to run it would be pretty difficult.  All sides pretty much have the ability to take out the other side's energy production and distribution facilities, in some cases (like the electric grid) without even firing a missile, just letting loose a Virus or two over the net.

It looks to be quite the show though, with Act II set to begin here now.  The Key Players are all set in place...

It's SHOWTIME!

RE
Title: Re: Official Chinese Toast Thread
Post by: Petty Tyrant on March 10, 2014, 04:39:57 AM
Another excellent explanation for the layman there RE.
Title: Re: Official Chinese Toast Thread
Post by: WHD on March 10, 2014, 07:29:57 AM
China bubble bursts, defaults ricochet across America. No way does this 70% consumer-driven economy not crash, starved of cheap Chinese consumer product. I don't care how much money flees China etc into the "stable" dollar. If consumer America can't assuage it's anxieties shopping, it will have a psychotic breakdown.

WHD
Title: DSM-VI Edits & Additions: Product Deficiency Syndrome
Post by: RE on March 10, 2014, 07:36:39 AM
China bubble bursts, defaults ricochet across America. No way does this 70% consumer-driven economy not crash, starved of cheap Chinese consumer product. I don't care how much money flees China etc into the "stable" dollar. If consumer America can't assuage it's anxieties shopping, it will have a psychotic breakdown.

No doubt, there will need to be psychological READJUSTMENT period when the Walmart shelves go bare.  Uncle Bob can make a KILLING during this period!  He can be the World Expert in Product Deficiency Syndrome!  LOL.

RE
Title: China Bubble Bursting
Post by: RE on March 13, 2014, 11:34:34 PM
Looks like the China Bubble is Bursting.

(http://3.bp.blogspot.com/_CnHk7Iwyd5I/TUgfuMkLqLI/AAAAAAAACDA/nlU1dbH7aEo/s1600/Bursting+A+Bubble3.jpg)

RE

Chinese Authorities Halt Virtual Credit Card Payments; Tencent, Yahoo Crashing

Tyler Durden's picture





 

 

The PBOC issued a statement today, according to 21st Century Business Herald, that halts virtual credit card products and "face-to-face" payment services such as QR code payment:

Tencent is down over 5%, China CITIC is crushed, and Yahoo was dumped in morning trading in Japan (on the back of Alibaba's Alipay service being affected).

 

21st Century Business Herald reports:

March 13, the central bank issued an urgent document halt Alipay, Tencent's virtual credit card products, but stopped there barcode (QR Code) payment and other payment services face to face.

21st Century Network 21 has learned that on March 13, the central bank issued an urgent document halt Alipay, Tencent's virtual credit card products, but stopped there barcode (QR Code) payment and other payment services face to face.

 

Tencent is tumbling (and it appears perhaps a few people knew earlier in the week)...

China CITIC is down hard...

 

and Yahoo (trading in Japan) was flushed on massive volume at the open...


RE
Title: Bye, Bye, Chinese RE Bubble Pie
Post by: RE on March 19, 2014, 11:55:35 PM
AKA...

KATY BAR THE DOOR!

A scramble to liquidate RE investments is marching into one of the most illiquid types of investment you can make in a collapsing market.

This will be entertaining to watch as it plays out.

RE

The Music Just Ended: "Wealthy" Chinese Are Liquidating Offshore Luxury Homes In Scramble For Cash

Tyler Durden's picture





 

 

One of the primary drivers of the real estate bubble in the past several years, particularly in the ultra-luxury segment, were megawealthy Chinese buyers, seeking to park their cash into the safety of offshore real estate where it was deemed inaccessible to mainland regulators and overseers, tracking just where the Chinese record credit bubble would end up. Some, such as us, called it "hot money laundering", and together with foreclosure stuffing and institutional flipping (of rental units and otherwise), we said this was the third leg of the recent US housing bubble. However, while the impact of Chinese buying in the US has been tangible, it has paled in comparison with the epic Chinese buying frenzy in other offshore metropolitan centers like London and Hong Kong. This is understandable: after all as Chuck Prince famously said in 2007, just before the first US mega-bubble burst, "as long as the music is playing, you've got to get up and dance." In China, the music just ended.

But more so than mere analyses which speculate on the true state of the Chinese record credit-fueled economy, such as the one we posted earlier today in which Morgan Stanley noted that China's "Minsky Moment" has finally arrived, we now can judge them by their actions.

And sure enough, it didn't take long before the debris from China's sharp, sudden attempt to "realign" its runaway credit bubble, including the first ever corporate bond default earlier this month, floated right back to the surface.

Presenting Exhibit A:

 
 

Cash-strapped Chinese are scrambling to sell their luxury homes in Hong Kong, and some are knocking up to a fifth off the price for a quick sale, as a liquidity crunch looms on the mainland.

Said otherwise, what goes up is now rapidly coming down.

 
 

Wealthy Chinese were blamed for pushing up property prices in the former British territory, where they accounted for 43 percent of new luxury home sales in the third quarter of 2012, before a tax hike on foreign buyers was announced.

 

The rush to sell coincides with a forecast 10 percent drop in property prices this year as the tax increase and rising borrowing costs cool demand. At the same time, credit conditions in China have tightened. Earlier this week, the looming bankruptcy of a Chinese property developer owing 3.5 billion yuan ($565.25 million) heightened concerns that financial risk was spreading.

 

"Some of the mainland sellers have liquidity issues - say, their companies in China have some difficulties - so they sold the houses to get cash," said Norton Ng, account manager at a Centaline Property real estate office close to the China border, where luxury houses costing up to HK$30 million ($3.9 million) have been popular with mainland buyers.

Alas, as the recent events in China, chronicled in minute detail here have revealed, the "liquidity issues" of the mainland sellers are about to go from bad to much worse. As for Hong Kong, it may have been last said so long ago nobody even remembers the origins of the word but, suddenly, it is now a seller's market:

 
 

Property agents said mainland Chinese own close to a third of the existing homes that are now for sale in Hong Kong - up 20 percent from a year ago. Many are offering discounts of 5-10 percent below the market average - and in some cases as much as 20 percent - to make a quick sale, property agents and analysts said.

Also known as a liquidation. And like every game theoretical outcome, he who defects first, or in this case sells, first, sells best. In fact, since panicked selling will only beget more selling, watch as prices suddenly plunge in what was until recently one of the most overvalued property markets in the world. And with prices still at nosebleed levels, not even BlackRock would be able to be a large enough bid to absorb all the slamming offers as suddenly everyone rushes to cash out.

The biggest irony: after creating ghost towns at home, the Chinese "uber wealthy" army is doing so abroad.

 
 

In a Hong Kong housing development called Valais, about 10 minutes drive from the Chinese border, real estate agents said that between a quarter and a half of the 330 houses are now on sale. At the development's frenzied debut in 2010, a third of the HK$30-HK$66 million units were sold on the first day, with nearly half going to mainland China buyers.

 

Dubbed a "ghost town" by local media, the development built by the city's largest developer, Sun Hung Kai Properties Ltd (0016.HK), is one of many estates in Hong Kong where agents are seeing an increasing number of Chinese eager to sell.

 

"Many mainland buyers bought lots of properties in Hong Kong when the market was red-hot three years ago," said Joseph Tsang, managing director at Jones Lang LaSalle. "But now they want to cash in as liquidity is quite tight in the mainland."

Perhaps our post from yesterday chronicling the crash of the Chinese property developer market was on to something. And of course, as also described in detail, should China's Zhejiang Xingrun not be bailed out, as the PBOC sternly refuted it would do on Weibo, watch as the intermediary firms themselves shutter all credit, and bring the Chinese property market, both domestic and foreign, to a grinding halt (something he highlighted in our chart of the day).

Meanwhile, the selling rush is on.

In a nearby development called The Green - developed by China Overseas Land & Investment (0688.HK) - about one-fifth of the houses delivered at the start of this year are up for sale. More than half of the units, bought for between HK$18 million and HK$60 million, were snapped up by mainland Chinese in 2012.

Because so much changes in just over a year.

 
 

"Some banks were chasing them (Chinese landlords) for money, so they need to move some cash back to the mainland," said Ricky Poon, executive director of residential sales at Colliers International. "They're under greater pressure from banks, so they're cutting prices."

 

In West Kowloon district, an area where mainland Chinese bought up close to a quarter of the apartments in many newly-developed estates, some Chinese landlords are offering discounts on the higher-end, three- to four-bedroom apartments they bought just a few years ago.

 

This month, a Chinese landlord sold a 1,300 square foot (121 square meter) apartment at the Imperial Cullinan - a high-end estate developed by Sun Hung Kai in 2012 - for HK$19.3 million, 17 percent less than the original price. The landlord told agents to sell the flat "as soon as possible," said Richard Chan, branch manager at Centaline Property in West Kowloon.

 

In the same area, a 645 square foot, 2-bedroom flat in the Central Park development was sold in just two days after the Chinese owner put it on the market at HK$6.5 million in what agents called the year's best bargain - the cheapest price for a unit of its kind over the past year.

Don't worry there will be many more bargains. Why? Because what was once a buying panic - as recently as months ago - has finally shifted to its logical conclusion. Selling.

 
 

"The most important thing for them is to sell as soon as possible," Centaline's Chan said. "In the past two weeks, those who were willing to cut prices were mainland Chinese. It is going to have some impact on the local property market, that's for sure."

Indeed. And once the Hong Kong liquidation frenzy is over, and leaves the city in a state of shock, watch as the great Chinese selling horde stampedes from Los Angeles, to New York, to London, Zurich and Geneva, and leave not a single 50% off sign in its wake.

The good news? All those inaccessibly priced houses that were solely the stratospheric domain of the ultra-high net worth oligarch and criminal jet set, will soon be available to the general public. Especially once the global housing bubble pops, which may have just happened.


RE
Title: Re: Bye, Bye, Chinese RE Bubble Pie
Post by: RE on March 20, 2014, 12:02:54 AM
And still more Good Newz from China...

RE

The Chinese Yuan Is Collapsing

Tyler Durden's picture





 

 

The Yuan has weakened over 250 pips in early China trading. Trading at almost 6.22, we are now deeply into the significant-loss-realizing region of the world's carry-traders and Chinese over-hedgers. Morgan Stanley estimates a minimum $4.8bn loss for each 100 pip move. However, the bigger picture is considerably worse as the vicious circle of desperate liquidity needs are starting to gang up on Hong Kong real estate and commodity prices. For those who see the silver lining in this and construe all this as a reason to buy more developed world stocks on the premise that the money flooding out of China (et al.) will be parked in the S&P are overlooking the fact that the purchase price of these now-unwanted positions was most likely borrowed, meaning that their liquidation will also extinguish the associated credit, not re-allocate it.

 

While widening the trading bands keeps some semblance of rationality, this is anything but an orderly unwind of the world's largest carry trades:

For some context, this is the biggest quarterly drop in CNY since Q4 1993...

 

 

How Much Is at Stake?
In their previous note, MS estimated that US$350 billion of TRF have been sold since the beginning of 2013. When we dig deeper, we think it is reasonable to assume that most of what was sold in 2013 has been knocked out (at the lower knock-outs), given the price action seen in 2013.

Given that, and given what business we’ve done in 2014 calendar year to date, we think a reasonable estimate is that US$150 billion of product remains.

 

Taking that as a base case, we can then estimate the size of potential losses to holders of these products if USD/CNH keeps trading higher.

 

In round numbers, we estimate that for every 0.1 move in USD/CNH above the average EKI (which we have assumed here is 6.20), corporates will lose US$200 million a month. The real pain comes if USD/CNH stays above this level, as these losses will accrue every month until the contract expires. Given contracts are 24 months in tenor, this implies around US$4.8 billion in total losses for every 0.1 above the average EKI.

 

Below we have tried to simplify what is happening as much as possible... (since there are many pathways into and out of all of these positions) to try and enable most to comprehend the problem

Virtuous circle... (last few years)

BUT what happens when one of these chains start to break? OR ALL OF THEM? (now!)

And then... (tomorrow)

Remember carry-traders are little more than sophisticated leveraged momentum players - so when the trend is no longer your friend, no amount of carry-arbitrage will cover MtM losses on the notional...

 

Arguing that the PBOC can defend the currency is moot (they clearly do not wish to); Arguing that the PBOC will manage liquidity via their huge FX reserves is moot (they have done so with the banks - who are awash with liquidity as noted by the low repo rates) - this is about forcing the shadow-banking system to shrink before the bubble becomes totally untenable... unfortunately, we suspect it already has...

Oh dear, remember the Chinese corporation that untenably insolvent but "promised" it would meet interest payments in July and not default... well:

Uh oh...

All the carry-funded idiocy of the world is starting to uwind

 

As the world slowly realizes the Fed's growing hawkishness (what are they afraid of? or do they really believe that the economy is growing organically?)

Title: Official Chinese Toast Thread: Ambrose Capitulates
Post by: RE on March 21, 2014, 11:29:57 PM
When Ambrose capitulates to a collapsing Chinese Carry Trade, there are definite problems.

Did he actually MENTION Derivatives here?  ACCCKKKK!

RE

Tumbling Chinese yuan sets off 'carry trade' rout, triggers derivatives contracts (http://www.telegraph.co.uk/finance/china-business/10712339/Tumbling-Chinese-yuan-sets-off-carry-trade-rout-triggers-derivatives-contracts.html)

The yuan has lost 3pc since January, a clear break with China’s long-standing policy of slow appreciation

(http://i.telegraph.co.uk/multimedia/archive/02858/yuan_2858646b.jpg)

 China’s yuan has suffered its biggest one-week fall in 20 years, nearing key trigger levels that threaten a wave of forced selling and mounting stress for those with dollar debts.

The jitters come amid reports of fire-sales of Hong Kong property by Chinese investors desperate to raise cash, some slashing their prices by 20pc for a quick sale. A liquidity squeeze in mainland China has already led to the collapse of Zhejiang Xingrun real estate this week with $570m of debts, the biggest property failure so far.

The yuan weakened sharply on Thursday to 6.23 against the dollar and has now lost 3pc since January, a clear break with China’s long-standing policy of slow appreciation.

Geoffrey Kendrick, from Morgan Stanley, said the currency has broken through the 6.20 level where a cluster of structured products are triggered. These are known as losses on target redemption funds. The losses have already hit $3.5bn.

The latest move creates a potential “non-linear movement” that could push the yuan rapidly to the next level at 6.38, where estimated losses would reach $7.5bn, and from there jump to 6.50.

Mr Kendrick said banks in Singapore, Taiwan and South Korea are heavily exposed, but there could also be a serious fallout for Chinese airlines, shipping and property companies, as well as a nexus of finance built around use of copper and iron as collateral.

Chinese companies have borrowed $1.1 trillion on the Hong Kong markets, a quarter from UK-based banks. There is complex web “carry trade” of positions in which investors borrow in dollars to buy yuan assets, often with leverage. These trades are highly vulnerable to a dollar squeeze as the US Federal Reserve brings forward its plans for rate rises.

Morgan Stanley said the Chinese central bank may have to intervene to shore up the yuan by selling some of its US dollar bonds if the slide goes much further. The authorities spent $80bn in June/July 2012 to defend its currency band.

For now China seems to be weakening the yuan deliberately. Mark Williams and Qinwei Wang, from Capital Economics, said the data flow suggests that the central bank bought $25bn of foreign bonds last month in order to force down the currency. The motive is to teach speculators a lesson and curb hot money inflows.

However, suspicions are also are growing that China’s authorities have quietly switched to a devaluation policy to buffer the shock to the economy as they attempt to curb excess credit, even though this would risk a clash with Washington. “The more they undershoot their growth target, the more tempting it may look to have a weaker currency to help out,” said Kit Juckes, from Societe Generale.

Premier Li Keqiang said on Thursday that China would take steps quickly to “stabilise growth and boost domestic demand”, a sign Beijing is worried that tightening may have gone too far. Credit Agricole expects the central bank to slash the reserve requirement ratio for banks by 200 basis points this year.

Morgan Stanley said China is approaching a “Minsky Moment”, a turning point when credit bubbles implode under their weight. “There is evidence that this debt growth has become excessive and non-productive. It now takes four renminbi of debt to create one renminbi of GDP growth from a nearly 1:1 ratio in the early and mid-2000s.”

“It is clear to us that speculative and Ponzi finance dominate China’s economy at this stage. The question is when and how the system’s current instability resolves itself,” said the bank.

“A disorderly unwind could take Chinese growth down to 4pc in a shorter time frame with potentially disastrous consequences for levered Chinese assets (banks, property) and the entire commodity supply chain,” it said.
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on April 20, 2014, 05:59:50 PM
Oh my GOD!  You mean they could slow from a FANTASTICALLY fast rate of growth
down to only a VERY fast rate of growth?!?  This is a disaster!  This presages the
irreversible collapse of not only China, but of global industrial civilization!

For Banksters this represents a "Hard Landing", because  all their investments are based on the Chinese continuing to grow their economy at outrageous rates.

{yawn}

15 months and counting, here.

China is at 7.4% annualized growth, about where it was 2 years ago.

No collapse. No "hard landing" because China is not growing at the rate it was during the super-growth years.

BUT, you never know, right? The wheels could come off NEXT MONTH! We could be, at this very moment, on the very cusp of the tidal wave!  It could ALL come CRASHING DOWN at ANY MOMENT!

And if it doesn't, and the tension causes too much anxious depression, we can always just off ourselves, like Ruppert.

Title: Re: Official Chinese Toast Thread
Post by: RE on April 20, 2014, 06:44:26 PM
No collapse. No "hard landing" because China is not growing at the rate it was during the super-growth years.

I am sure China will do just fine here.

(http://static.guim.co.uk/sys-images/Guardian/Pix/pictures/2013/1/14/1358174513421/Severe-smog-and-air-pollu-010.jpg)

RE
Title: Re: Official Chinese Toast Thread
Post by: Karpatok on April 20, 2014, 06:53:35 PM
Oh my GOD!  You mean they could slow from a FANTASTICALLY fast rate of growth
down to only a VERY fast rate of growth?!?  This is a disaster!  This presages the
irreversible collapse of not only China, but of global industrial civilization!

For Banksters this represents a "Hard Landing", because  all their investments are based on the Chinese continuing to grow their economy at outrageous rates.

{yawn}

15 months and counting, here.

China is at 7.4% annualized growth, about where it was 2 years ago.

No collapse. No "hard landing" because China is not growing at the rate it was during the super-growth years.

BUT, you never know, right? The wheels could come off NEXT MONTH! We could be, at this very moment, on the very cusp of the tidal wave!  It could ALL come CRASHING DOWN at ANY MOMENT!

And if it doesn't, and the tension causes too much anxious depression, we can always just off ourselves, like Ruppert.
   Allan, welcome back to see you posting again. What a wonderful breath of fresh air and CFS. And in addition to what you have said, it stands to reason that China will also help  The Russian Federation in the standoff over the Ukraine. Let's hope so. What do you think?  Karpatok
Title: Re: Official Chinese Toast Thread
Post by: Petty Tyrant on April 20, 2014, 07:22:37 PM
Oh my GOD!  You mean they could slow from a FANTASTICALLY fast rate of growth
down to only a VERY fast rate of growth?!?  This is a disaster!  This presages the
irreversible collapse of not only China, but of global industrial civilization!

For Banksters this represents a "Hard Landing", because  all their investments are based on the Chinese continuing to grow their economy at outrageous rates.

{yawn}

15 months and counting, here.

China is at 7.4% annualized growth, about where it was 2 years ago.

No collapse. No "hard landing" because China is not growing at the rate it was during the super-growth years.

BUT, you never know, right? The wheels could come off NEXT MONTH! We could be, at this very moment, on the very cusp of the tidal wave!  It could ALL come CRASHING DOWN at ANY MOMENT!

And if it doesn't, and the tension causes too much anxious depression, we can always just off ourselves, like Ruppert.
   Allan, welcome back to see you posting again. What a wonderful breath of fresh air and CFS. And in addition to what you have said, it stands to reason that China will also help  The Russian Federation in the standoff over the Ukraine. Let's hope so. What do you think?  Karpatok

Alan, does this mean you think the australian economy dependent on shipping raw materials to china will not collapse, which I have to admit Im impatiently waiting for? Can they overcome the pollution problems by buying up property everywhere else?

K, its obviously a depusiffation plague.
Title: Re: Official Chinese Toast Thread
Post by: Karpatok on April 20, 2014, 07:35:12 PM
    UB, just what did you mean by "depusiffation" plague. I've never seen that word before. Did you mean the pork virus that has killed so many millions of swine in the US?
Title: Re: Official Chinese Toast Thread
Post by: MKing on April 20, 2014, 08:42:45 PM
No collapse. No "hard landing" because China is not growing at the rate it was during the super-growth years.

I am sure China will do just fine here.

(http://static.guim.co.uk/sys-images/Guardian/Pix/pictures/2013/1/14/1358174513421/Severe-smog-and-air-pollu-010.jpg)

RE

of course they will. Once they figure out what Pittsburgh did...which looked very similar....the results of changes in behavior is only a change in behavior away. The Nike slogan wins again...as Pittsburgh certainly can attest.



(http://cdn.theatlanticcities.com/img/upload/2012/06/05/p1_1/largest.jpg)
Title: Re: Official Chinese Toast Thread
Post by: RE on April 20, 2014, 11:04:24 PM
No collapse. No "hard landing" because China is not growing at the rate it was during the super-growth years.

I am sure China will do just fine here.

(http://static.guim.co.uk/sys-images/Guardian/Pix/pictures/2013/1/14/1358174513421/Severe-smog-and-air-pollu-010.jpg)

RE

of course they will. Once they figure out what Pittsburgh did...which looked very similar....the results of changes in behavior is only a change in behavior away. The Nike slogan wins again...as Pittsburgh certainly can attest.



(http://cdn.theatlanticcities.com/img/upload/2012/06/05/p1_1/largest.jpg)

You might do a little more research before holding up Pittsburgh as a target model for the Chinese.

(http://i.huffpost.com/gadgets/slideshows/238828/slide_238828_1228147_huge.jpg?1342451471)

(http://i.huffpost.com/gadgets/slideshows/238828/slide_238828_1228146_small.jpg)

(http://i.huffpost.com/gadgets/slideshows/238828/slide_238828_1228143_small.jpg)

(http://i.huffpost.com/gadgets/slideshows/238828/slide_238828_1228142_small.jpg)

(http://i.huffpost.com/gadgets/slideshows/238828/slide_238828_1228148_small.jpg)

RE

Title: Re: Official Chinese Toast Thread
Post by: Petty Tyrant on April 21, 2014, 02:32:59 AM
    UB, just what did you mean by "depusiffation" plague. I've never seen that word before. Did you mean the pork virus that has killed so many millions of swine in the US?

because we cannot edit our posts I could not correct, I meant de-pussification.
Title: Re: Official Chinese Toast Thread
Post by: Surly1 on April 21, 2014, 08:57:27 AM
Meanwhile, everything is steady untrammeled growth and flowers and kitties . . .

China: “Violent Government Thugs” Beaten To Death By Angry Crowds After They Killed A Man Who Was Documenting Their Brutality (http://revolution-news.com/china-violent-government-thugs-beaten-death-angry-crowds-killed-man-documenting-brutality/)
*Graphic Warning*

At least 4 Chengguan, the most hated police-inspectors in China, were beaten to death by angry people in Cangnan County of Wenzhou City, Zhejiang Province (located in the industrial southeast), after inspectors killed a man with a hammer. The police-inspectors hit the man with a hammer until he started to vomit blood, because he was trying to take pictures of their violence towards a woman, a street vendor. The man was rushed to hospital, but died on the way. Same inspectors beat a vending man to death in 2011 during a dispute over watermelon.

** Warning-- some of the images are very brutal and depict graphic violence**


(https://scontent-a-dfw.xx.fbcdn.net/hphotos-ash3/t1.0-9/p403x403/10269607_308872682599634_4523620794157745219_n.jpg)




http://revolution-news.com/china-violent-government-thugs-beaten-death-angry-crowds-killed-man-documenting-brutality/ (http://revolution-news.com/china-violent-government-thugs-beaten-death-angry-crowds-killed-man-documenting-brutality/)
Title: Re: Official Chinese Toast Thread
Post by: MKing on April 21, 2014, 10:46:58 AM
You might do a little more research before holding up Pittsburgh as a target model for the Chinese.

Why? You presented air pollution as the context, so did I. Certainly the last time I was prowling Pittsburgh it didn't look any better or worse in terms of abandoned property as any other large metropolitan area I've been in, and certainly there was none of the aforementioned air pollution.

Certainly if Americans can clean up the air in Pittsburgh, the Chinese can do the same.

This endless repetition of the idea that people can't change is silly, considering the evidence all around us.

You are originally a New England liberal, even they understand the difference a chance in behavior makes, living with Lake Erie on their borders.
Title: Re: Official Chinese Toast Thread
Post by: RE on April 21, 2014, 01:05:56 PM

Certainly if Americans can clean up the air in Pittsburgh, the Chinese can do the same.


Amerikans cleaned up the air in Pittsburgh by shipping the factories over to China.  Where is China going to ship the factories?

The air in China will eventually clear, but when it does there won't be anyone making Solar PV cells or Li-I Batteries for your EV.

RE
Title: Re: Official Chinese Toast Thread
Post by: MKing on April 21, 2014, 01:38:03 PM

Certainly if Americans can clean up the air in Pittsburgh, the Chinese can do the same.


Amerikans cleaned up the air in Pittsburgh by shipping the factories over to China.  Where is China going to ship the factories?

Maybe they won't. A choice American steel manufacturers (of importance to what was once Steel City) made was to build BETTER FACTORIES. A choice that generally follows after the workers get pissed off at dying from various forms of disease and decide enough is enough.


Old steel plant.

(http://www.wnyheritagepress.org/photosofweek/aerial_bethlehem_steellge1.jpg)

Half century later and choices to clean things up...modern steel plant.

(http://www.northamericanstainless.com/wp-content/themes/northamericanstainless/images/nas_plant_crop.jpg)

Chinese steel plant.

(http://cdn.c.photoshelter.com/img-get/I0000FqWnebp2DMU/s/750/600/081201-Baotou-047.jpg)


Quote from: RE

The air in China will eventually clear, but when it does there won't be anyone making Solar PV cells or Li-I Batteries for your EV.

RE

That would depend on the choices the Chinese decide to make. Those choices will raise the cost of production, and then things get much more economically interesting, considering the advantages the US has in both the application of cleaner technologies, as well as abundant natural gas resources, which are extremely important to all sorts of manufacturing activities. Cheap labor is not the be all to end all, as industries bringing more manufacturing back to the US are discovering. Even in Wisconsin for crying out loud.

http://www.jsonline.com/business/wisconsin-manufacturers-see-value-in-returning-work-to-us-b99238723z1-254065201.html (http://www.jsonline.com/business/wisconsin-manufacturers-see-value-in-returning-work-to-us-b99238723z1-254065201.html)
Title: Re: Official Chinese Toast Thread
Post by: Surly1 on April 21, 2014, 05:50:32 PM

Certainly if Americans can clean up the air in Pittsburgh, the Chinese can do the same.


Amerikans cleaned up the air in Pittsburgh by shipping the factories over to China.  Where is China going to ship the factories?

Maybe they won't. A choice American steel manufacturers (of importance to what was once Steel City) made was to build BETTER FACTORIES. A choice that generally follows after the workers get pissed off at dying from various forms of disease and decide enough is enough.


Old steel plant.

(http://www.wnyheritagepress.org/photosofweek/aerial_bethlehem_steellge1.jpg)

I agree with MKing here. In fact, I've read a couple of his posts tonight that I agree with, so I might be unwell. Although the picture provided above does not seem to be Pittsburgh. Here is a scene I remember seeing regularly going to school:

(http://daveayers.com/Modeling/images/Steel/Aliquippa_Works.jpg)

I grew up in Pittsburgh in the 50s and 60s, so I have a boyhood recollection a concerted effort of civic pride to clean up industry and the city, called the "Pittsburgh renaissance," which also included some municipal investment. Local folklore had it that Pittsburgh businessmen in the 40s and 50s had to take an extra white shirt or two to change into. As a little buy, I can recall waking up in the middle of the night with the sky blood red, and telling my parents that it must be time to get up. It was actually the blast furnaces at the Edwin Thompson Works over the next hill in Braddock that turned the night sky red. In time they did indeed build cleaner factories, and the industry didn't start to migrate to the Pacific Rim until the late 70s, when our national economic policy seemed to be to encourage industry to export American jobs.

So people will do pretty much what they make up their minds to do. It seems that it was easier back then when there was more potential for civic mindedness, and shared costs, as opposed to the devil-take-the-hindmost mentality that obtains today.

Right now, the Chinese seem to have other preoccupations:

Biggest Strike In China’s History Enters 6th Day (http://revolution-news.com/biggest-strike-chinas-history-enters-6th-day-police-arrested-organizers-workers-battle-swat-troops/ …)

(https://farm8.staticflickr.com/7201/13902639866_8e16602aea_o.jpg)

The largest strike in China’s history has entered the sixth day, defying state attempts to repress workers struggling against economic and social injustice. Police arrested several organizers of the strikers at the Yue Yuen factory, which produces shoes for Nike and Adidas.

As the situation deteriorates, the thousands of workers are ever angrier after the management of the factory completely denies any violations in the payment of their social security. Workers in Dongguan, where exists the largest labor rights movement, have taken solidarity actions with the strikers of Yue Yuen. Large numbers of workers in Dongguan – apparently in thousands – took it to the streets to protest wage injustice and the government’s oppression of migrant workers, and to demand the government pay the social security it owned to the workers.

The Dongguan workers warned the Yue Yuen strikers that the government and the companies want to use force against them.

The production of the factory is almost paralized, as party cadres have started a smearing campaign against workers calling them “traitors”. The police arrested several organizers. Strikers battled special police troops, SWAT, on the streets. They threw water bottles at riot police SWAT, which attacked them brutally and arrested several of them.

When the wife of an organizer learned that the police arrested her husband during the fifth night, thousands of people flocked the administrative center and all shouted that Mr. Yang be released immediately.

According to the Shenzhen Chunfeng Labor Dispute Service on April 17th, the police arrested at their home the youngest workers on strike and took them away. Next day, demanding their release, thousands of workers took it to the streets, but their march was blocked and many demonstrators were taken away by the police. Some seem to have been arrested just for taking pictures of the unrest. Lots of plainclothes police – apparently in their hundreds – were deployed among the demonstrators to steal their phones so they could not take any pictures.

The number of the workers gathering outside the factory and refusing to work was well over 20,000.

The companies and the government made a third set of proposals, hoping to convince the strikers to go back to work. Apparently the state and the companies admitted they owe unpaid social security to each worker, and they promised to finance the housing fund, but the workers did not gave up, and the factory strike continued unabated.

According to the Shenzhen Chunfeng Labor Dispute Service workers continued their strike, because the responses they got from the government were not satisfactory. What seems to have angered them terribly was the fact that the factory management completely denied that they committed any violations in the payment of the contributions for the workers’ pensions and other social security.

The government cannot control the movement of a migrant workers. Lowest and worst jobs are given to the country’s 300 million migrant workers – people who were forced to move to the cities and work in factories for money so they could support their families.

The state and the other classes brutally discriminate against these proletarians. While white collar urban workers own even 2 or 3 houses, the hukou system, the household registration system, has been dividing the working class into two distinct categories of the urban and the rural. This denies access for the migrant workers, who had to leave their villages to work in factories in the cities, basic access to healthcare, education as other city residents. They are often discriminated against in terms of salary and treatment. The migrant workers are exposed to the worst maltreatment at work, paying with their lives, some being burned alive while making shoes for western corporations.

Most often they are forced to work without being paid. Riots are often caused by the criminal behavior of bosses towards workers – some bosses even kill the laborers if they demand their rights. In China, the intermediaries chain of subcontractors is so thick that workers are always the last to be paid. If they are. January is usually the strike-month, as migrant workers stop working to force employers to pay them restant wages so that they can get the money to their families before the Chinese New Year. There have been over 70 strikes in the industrial southeast only in the first week of January this year. Strikes have intensified since then, hundreds of strikes, to which participate up to 10,000 workers, have been taking place relentlessly.

(Follow the link for many images)
Title: Official Chinese Toast: 60% of Water in China too Polluted to Drink
Post by: RE on April 23, 2014, 10:33:16 PM

60% Of China's Water "Too Polluted To Drink"

Tyler Durden's picture





 

 

Forget bank-runs, the water run has begun in China. Residents of the western city of Lanzhou rushed to buy mineral water earlier this month after local tap water was found to contain excessive levels of the toxic chemical benzene. But that is the tip of what is a massive problem facing the Chinese people. Not only do they suffer choking smog day after day, but, as The Business Times reports, sixty per cent of underground water in China which is officially monitored is too polluted to drink directly, state media have reported, underlining the country's grave environmental problems.

 

 

As The Business Times reports,

Sixty per cent of underground water in China which is officially monitored is too polluted to drink directly, state media have reported, underlining the country's grave environmental problems.

 

Water quality measured in 203 cities across the country last year rated "very poor" or "relatively poor" in an annual survey released by the Ministry of Land and Resources, the official Xinhua news agency said late Tuesday.

 

Water rated "relatively" poor quality cannot be used for drinking without prior treatment, while water of "very" poor quality cannot be used as a source of drinking water, the report said.

 

The proportion of water not suitable for direct drinking rose from 57.4 per cent from 2012, it said.

As we noted previously, The World Bank's Ismail Serageldin puts it succinctly: "The wars of the 21st century will be fought over water."

That old axiom that the earth is 75% water... not quite. In reality, water constitutes only 0.07% of the earth by mass, or 0.4% by volume.

 

This is how much we have, depicted graphically:

 

 

What this shows is the relative size of our water supply if it were all gathered together into a ball and superimposed on the globe.

 

The large blob, centered over the western US, is all water (oceans, icecaps, glaciers, lakes, rivers, groundwater, and water in the atmosphere). It's a sphere about 860 miles in diameter, or roughly the distance from Salt Lake City to Topeka. The smaller sphere, over Kentucky, is the fresh water in the ground and in lakes, rivers, and swamps.

 

Now examine the image closely. See that last, tiny dot over Georgia? It's the fresh water in lakes and rivers.

There's no doubt that this is a looming crisis we cannot avoid. Everyone has an interest in water. How quickly we respond to the challenges ahead is going to be a matter, literally, of life and death. Where we have choices at all, we had better make some good ones.

Title: Official Chinese Toast: Mega Sandstorm hits China
Post by: RE on April 24, 2014, 11:07:05 PM
Nature Bats Last.

RE

http://www.youtube.com/v/LVmO4FgIquM?feature=player_detailpage

Watch As China Is Swept Under The Worst Sandstorm In 18 Years (http://www.zerohedge.com/news/2014-04-24/watch-china-swept-under-worst-sandstorm-18-years)

Submitted by Tyler Durden on 04/24/2014 22:51 -0400

Some worry about the quality of the drinking water in China, others fear the choking smog of the cities, still more are concerned about the inevitable collapse of their real-estate bubble; but none of these compare to the Gansu Province (in the Northwest of China) strongest sandstorm since at least 1996 that turned day into night Wednesday afternoon.

As The Telegraph reports,

    A strong sandstorm swept Gansu Province in northwest China on Wednesday, reducing visibility to less than 65ft, according to the provincial meteorological center.

    The sandstorm, the strongest since 1996 according to reports, started in the early afternoon in Dunhuang County.

    "Suddenly it became dark and I can't tell whether it's day or night," said one resident.

    "My nose hurts and I can't open my eyes," another resident said.

    The Jiuquan City Meteorological Center, which includes Dunhuang, issued a sandstorm red alert, the highest level alert, forecasting that visibility would be reduced to less than 164ft throughout Jiuquan on Wednesday evening.


Title: Re: Official Chinese Toast Thread
Post by: alan2102 on April 27, 2014, 02:04:59 PM
  Allan, welcome back to see you posting again. What a wonderful breath of fresh air and CFS. And in addition to what you have said, it stands to reason that China will also help  The Russian Federation in the standoff over the Ukraine. Let's hope so. What do you think?  Karpatok

Breath of fresh air and... CFS?  Chronic Fatigue Syndrome?  :D

Sorry, I don't have an opinion on China's relation to the Russians via a vis the Ukraine, other than to say that Eurasians (especially easterly ones) will have the tendency to stick together against the West.
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on April 27, 2014, 02:10:13 PM
  Allan, welcome back to see you posting again. What a wonderful breath of fresh air and CFS. And in addition to what you have said, it stands to reason that China will also help  The Russian Federation in the standoff over the Ukraine. Let's hope so. What do you think?  Karpatok

Breath of fresh air and... CFS?  Chronic Fatigue Syndrome?  :D
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on April 27, 2014, 03:01:40 PM
Alan, does this mean you think the australian economy dependent on shipping raw materials to china will not collapse, which I have to admit Im impatiently waiting for? Can they overcome the pollution problems by buying up property everywhere else?

I would be surprised if anything describable as a "collapse" occurs to a nation shipping raws to China. Contraction, maybe, or probably; collapse, no.

China's pollution problems: complex topic, but in a nutshell they can work their way out of them over decades. They are already making massive investments in green or greenER technologies and energy production infrastructure. This will intensify as they are able. You cannot turn the Queen Mary around in one mile. China is a huge, complex society as I've pointed out elsewhere, and it takes them (understandably) many years and decades to accomplish these huge objectives. But they ARE accomplishing them; that was the point of my scores of posts on my old China thread. It may take them 50 or 100 years, or whatever, but they'll get there, because they THINK in terms of centuries and half-centuries.

Meanwhile, our society is dominated by short-term thinkers who can barely contemplate the quarter (3-months) after next, and whose response to things is limited to reptilian reaction to the immediate present (threat).  Our own dear R.E., here, is a good example: he thinks that posting scare-photos of terrible pollution in China AT THIS MOMENT constitutes a compelling argument for the idea that the problems are getting worse and can ONLY get worse. He posts these photos in an attempt to induce others to react in the same reptilian ("oh my GOD!") way that he does -- or that he presumably does, if he is for real. There is no future, no past, no context whatever; only NOW, and ISN'T IT TERRIBLE?  His scare-pics say nothing at all about the trajectory of this massive social order and what is in the offing even a few years from now, let alone a decade or a half-century, which is the real ground of play that we should be talking about (NOT this instant, or this quarter!). They also say nothing about where China has come from (don't ask!) and what all that pollution represents in terms of vastly, VASTLY improved living standards for most of the people in the country. Indeed, what all that pollution represents in terms of all the people who would now either be dead, or who would never have been born, because their parents would have died too young.  R.E. sees none of that, bless his heart. All he sees is the lurid National Enquirer version of things as expressed in a couple of his silly toy scare-shots.   Great stuff for emotionally-reactive ignorant slobs, and for those in the fold of the First Church of Doom; not so great for anyone with an average or better I.Q.  and a desire to understand the world.

Same thing goes for R.E.'s scare-shots -- doomer-porn -- of dilapidated buildings in Pittsburg, or wherever they were.  That's one of R.E.'s big things. Like the anti-abortionists who post pictures of bloody fetuses in a crude attempt to elicit base reactions.

Hey, R.E.: Newsflash! The world is FILLED with bad stuff! Just FILLED. And there are photos of a lot of it! Photos that you can download off the internet, and re-post so as to scare a WHOLE LOT MORE PEOPLE than would have been scared before!  Isn't that a great objective?  YES IT IS.  SO GET CRACKING.  POST MORE LURID, SORDID PHOTOS OF ALL THE BAD SHIT THAT IS HAPPENING!  I'M DEPENDING ON YOU!
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on May 01, 2014, 10:25:21 AM

LIES! LIES! LIES!

CHINA IS COLLAPSING AS WE SPEAK,
AND THESE MORONS TROT OUT LIES!




http://www.voanews.com/content/china-could-overtake-us-economy-this-year-reports/1904221.html (http://www.voanews.com/content/china-could-overtake-us-economy-this-year-reports/1904221.html)

News / Economy

Report: China Could Overtake US Economy This Year


(http://gdb.voanews.com/1196E1AE-F857-400F-88BC-D163C873639C_w640_r1_s_cx0_cy6_cw0.jpg)

A man yawns in a bus which drives past a construction site in Beijing, China, April 29, 2014.

April 30, 2014 6:02 AM

A new study suggests China's economy has grown faster than previously thought, leading some analysts to predict that China could surpass the United States as the world's biggest economy by the end of the year.

The figures were released Wednesday in a report by the International Comparison Program, which is part of the United Nations.

The ICP evaluates economies based on purchasing power parity, or PPP, which estimates how much money can buy in different countries. Some economists say the method helps more accurately determine a country's relative economic output, since comparisons are complicated by exchange rates.

Using its latest data, which calculated living costs in 2011, the program said China's PPP was 20 percent higher than its previous estimate in 2005. Given China's rate of growth since then, many economists expect China to surpass the U.S. later this year.

In an article titled "Crowning the Dragon," The Economist predicted Wednesday that China will become "the world's pre-eminent country" by the end of 2014. It noted that "the American Century ends, and the Pacific Century begins." The Financial Times and The Guardian also published similar predictions.

But the PPP rate does not take into account a nation's wealth per person. When this is considered, China, with more than 1.3 billion people, is still considered a developing nation and ranks well behind the United States.

China's economy grew strongly at double-digit growth rates for most of three decades before slowing in recent years. In terms of gross domestic product, China is widely expected to overtake the U.S. as the world's biggest economy, but many economists did not expect this to happen until later in the decade.

A government report Wednesday shows the U.S. GDP grew one-tenth of one percent in the first three months of 2014, which is much slower than the final quarter of 2013. 

Data from the World Bank show the U.S. GDP was more than $16 trillion in 2012, while China's was more than $8.2 trillion.  The GDP measures all the goods and services produced in a country.
Title: Official Chinese Toast Thread: Hard Landing Likely
Post by: RE on May 01, 2014, 05:01:55 PM
No Sugarcoating It: A Hard Landing Is Likely (http://english.caixin.com/2013-11-19/100606806.html)

Real reforms stripping speculators of their candy involve limiting government power. They are unlikely to come fast enough in this bubble economy
By Andy Xie

    Party Vows to Get SOEs to Turn over More Profits, Ease One-Child Policy
    The Importance of 'Theoretical Innovation' (Read: Word Games)
    What's in a Communiqué?
    Plenum Insight: Conclave 'Didn't Change Status of SOEs'
    Third Plenum Decision Eyes Further Economic Reforms

FROM THE AUTHOR

    What Form Should Financial Reforms Take?

    Readying for Financial Bubbles to Burst

    The Implications of Diverging Monetary Policies

    When the Tide Goes Out


China's asset bubble increasingly depends on financing from the shadow banking system. The carry trade – borrowing dollar loans at low interest rates offshore and converting the loans into yuan, either disguised as foreign direct investment or export revenue, for lending at a high interest rate – has become a significant source of funding in the shadow banking system. The recent surge of land prices in big cities may be due to it.

The rising share of unstable financing for the country's asset bubble threatens a chaotic ending. If the bubble suffers a confidence crash or a receding tide of liquidity, the unwinding of speculative holdings would be chaotic, causing a hard landing.

The carry trade drove the property bubble in Southeast Asia before 1997. The rising U.S. interest rate triggered its collapse. China is under the influence of the same force but on a much larger scale. The Fed's massive quantitative easing has driven up China's money supply, partly through the carry trade. If the Fed unwinds the QE, China's bubble will burst.

Real reforms may increase investment on a better economic outlook, which may offset the negative impact from unwinding the bubble. However, as all of the country's economic problems stem from spending and investment maximization by local governments, the only meaningful reform is major curtailment of government power. That seems distant.

Hard vs. Soft Landing

Japan had a soft landing in 1992. South Korea had a hard one in 1998. Soft or hard is not the same as good or bad. The outcome ultimately depends on how a country responds to challenges. My bias is that a soft landing is not good in general, and a hard landing is likely to lead to a better outcome and faster.

I believed for a long time that China would have a soft landing. When its economy began to descend in 2012, fear of a hard landing permeated financial markets for several months. My view on a soft landing was based on the dominance of bank loans in credit creation. The country's banks are government-owned. When property developers face a liquidity crunch, the banks are likely to reschedule their loans. A hard landing is a consequence of the snowball effect from creditors liquidating delinquent borrowers. When there is a big bubble funded by debt, as is usually the case, its bursting would lead to a hard landing if the credit agreements are stuck to. Hence, a soft landing is usually due to either an inability or unwillingness of creditors to enforce debt contracts. Japan, for example, was in such a situation in the 1990s.

The Asian Financial Crisis was such a hard landing, because short-term dollar debt was a major part of the financing for the investment-cum-property bubble. When the money was pulled out, it happened at such a speed that most Asian economies experienced banking collapses and maxi devaluation. The ensuing chaos froze all normal economic activities.

The hard landing in the Asian Financial Crisis did not lead to the same outcome everywhere. At one extreme, South Korea went through a rapid process of consolidation and recapitalization of the financial sector. It allowed bad companies to go bust and dramatically cut the government's role in the economy. On the other extreme, Thailand is dealing with the consequences of the crisis 15 years later.



The Rise of the Carry Trade

The carry trade is the most important and speculative force in international capital flows. Interest rates are different in different currencies and the across spectrum of credit quality. When the interest rate is higher in one currency than in another, it usually reflects a higher inflation rate in the former, which would lead to its depreciation against the latter. The interest rate difference reflects the inflation difference and the former's depreciation. Similarly, when two bonds have different interest rates, the difference reflects their different bankruptcy probability. Because currency depreciation and corporate bankruptcy happen infrequently, many investors or speculators cannot resist the temptation of arbitraging interest rate differences.

This force has come to China lately and in force, especially after the Fed defied market expectations and declined to taper its US$ 85 billion monthly QE in September. The money has shown up as foreign exchange reserves, prompting the rise of shadow bank financing and land kings lately in big cities.

Credit grew by roughly 14 trillion yuan in the first ten months of 2013. Nearly half is from non-bank institutions like trusts or entrusted loans. Bank loans dominated credit creation in the past. Diversification could be a good thing. But, if the change is due to rising risk and declining appetite of the banking system to lend, it is definitely a bad thing. China's situation fits the latter scenario. Land and property speculation has reached such a ridiculous level that a sane bank will try to extricate itself as fast as possible. Hence, the borrowers have to increase the interest rate for other sources of funding. The rise of the carry trade into China is due to the combination of the Fed's delaying tapering and the declining appetite of banks to lend.

The cross-border carry trade has a powerful effect on the monetary condition in the recipient country. Rising forex reserves lead to rising money supply. The resulting inflationary pressure supports speculation. Hence, when land prices rise, it seems that speculation is working, which attracts more to follow.

The supply side of the carry trade is, ironically, driven by declining profitability in non-speculative businesses. Many, if not most, private businesses in the eastern part of the country have slowed dramatically. Some have preserved past profits and are looking at loan sharking as a new business. Some are looking to speculation to bet on the recovery of their businesses.

For example, as the property market has struggled in most smaller cities, some developers have gone to loan sharks for funding to bet on land in big cities. They have often borrowed from the local businesses that are shifting from production to lending.

Even some of the biggest developers have gone to trusts for loans with high interest rates. Such loans go for double-digit interest rates even for the highest quality borrowers. The extra financing cost, compared to bank loans, is similar to the profit margin for the industry now. Hence, the high-interest loan can only be justified by betting on land prices surging continuously.

The carry trade and land speculation are closely intertwined. The declining profitability in the real economy has driven many to either loan sharking or land speculation. The Fed's QE incentivizes them. China's high interest rate, supported by expected speculative profit, pulls them in. The resulting monetary surge makes the speculation profitable for the time being.

The Inevitable Unwinding

A speculative bubble crashes either on a collapse of confidence or the tide of liquidity receding. The bursting of the dotcom bubble in 2000 represents the first kind. The 2007 subprime crash was of the second type, and was prompted by the Fed's rate hikes in 2005.

China's shadow banking system has become the main source of financing for the ongoing speculation. Nearly half of the credit growth this year can be classified as that. As such financing is usually short term, the speculative game depends on rollover confidence, as the underlying assets need years to become liquid. The confidence depends on faith in land prices surging for years to come. Such confidence is on thin ice to begin with because it is only working in big cities currently, and small and medium-sized cities are all facing difficulties. Any psychological shock could trigger rollover failures.

When the Fed does unwind its QE, China's shadow banking system will likely face a severe liquidity squeeze. Janet Yellen, the new Fed chairwoman, has expressed her disregard for asset bubbles and determination to push on until either the unemployment rate falls below the Fed's target or inflation breaches the Fed's limit. It is likely that either or both could be breached in 2014. It may mean the end of China's decade-long property bubble.



Bubbles and Consequences

China's property bubble had a major adjustment in 2012. The economy, of course, was adjusting too, as sales of new properties had been close to 15 percent of GDP. Both were healthy developments. China had a labor shortage. An economic downturn could be absorbed easily. The difficult task was to handle the financial fallout. But, at least, the mess would not become bigger.

Speculation and the economy have returned this year, mainly due to the shift in the official rhetoric to put growth stabilization first. It felt like miracle: mere words could revive the second largest economy in the world. It worked essentially like an assurance to speculators that the government would hold the floor. As the economy has become so dependent on speculation, stabilizing growth is equivalent to supporting speculation, which speculators would interpret as printing more money. As discussed before, the money printing has become self-fulfilling, as the carry trade is a major financing source.

China's rhetoric on growth and the Fed's on unemployment have reinforced each other in expanding a gigantic global bubble, bigger than the one before 2007.

When the bubble bursts, the impact on China and the United States will be very different. The United States' bubble is mainly in the stock market and in the properties for rich people. Its debt is not rising rapidly. Hence, when the bubble bursts, it is merely a round trip for speculators. China's bubble is sustained by debt. Its destructive power is much greater.

China's bubble may engulf more and more middle income people. For example, Shanghai's small apartments in old buildings may have risen 20 percent in price this year, while the prices of the large and expensive ones have not moved significantly and are still lower than two years ago. The small flats are rising in price because the total value seems small, like between 1 million yuan and 2 million yuan, and, hence, are possible speculation targets for average middle class households. But, the unit price is quite close to that of expensive centrally located flats. It works like stock splits that suck low-income punters into low-quality stocks. China's property bubble is evolving like the stock market in 2007, passing losses to the masses while insiders walk away with the cash.

Reform Isn't Speculation

Financial markets initially interpreted the communiqué released after the third plenum of the Communist Party's 18th Central Committee as long on lofty rhetoric and short on action and, hence, sold off. The release of more details, like loosening the one-child policy and allowing offshore insurance in the Shanghai Free Trade Zone, triggered a bounce. Even these measures are minor. The market responded because it saw the government respond to the market decline and believed that more candy would come in case of further market declines, i.e., the government wanted to support a market floor.

Real reform is not candy for speculation. China's is a bubble economy. Any real reform would trigger severe pain in the financial system. No reform, on the other hand, delays the inevitable and makes the eventual pain more severe.

China's reform is about changing the role of government, not tinkering with the market system. The country's economic challenges are overinvestment and overcapacity; financial challenges are inflation, bubbles and shadow banking; social challenges are environmental degradation and unsafe foodstuff. All these problems are related. The government's desire to maximize investment, revenue and spending power drives the economy. This desire is like a sort of supergravity over the market. Market improvements will be squashed under this force.

For example, interest rate liberalization sounds good and is good. However, local governments and property speculators or developers are the main borrowers. The later always hands their borrowed money to local governments as taxes. Would interest rate liberalization divert funds to other more efficient uses? Absolutely not. Other industries are not doing well and could not compete to pay higher interest rates anyway. On the lenders' side, who would jack up rates to attract funds? High-risk takers like city banks that would probably feed the money to their governments.

The Story of Bottled Water

Bottled water has become ubiquitous across China. The reason is that tap water is unsafe to drink. That is due to environmental degradation. Why is water pollution so severe? Other industrialized countries have experienced far less pollution. China's severe pollution is mainly due to local government desire to attract investment. Ignoring the environment is an advantage in this game, as it cuts production costs. Because there is no other power to offset the government's influence, widespread and severe environmental degradation is inevitable. The bottled water business reflects this.

As demand for bottled water grows, of course, it is an investment opportunity, too. Hence, the safety of bottled water becomes an issue. If one is willing to sacrifice the environment to attract investment, why not lower the standards for bottled water? That is indeed a serious issue. Consumers have to guess which bottled water is safe.

A further story is how bottled water has become a source of revenue. As some suppliers have become successful in the market, governments find it more profitable to tax them. Hence, the price of bottled water is rising.

This water story illustrates how much China's economy is distorted by unhealthy government power. This business is so big because of a government failure. As consumers pay for bottled water, it has become a source of government revenue, which, of course, goes into more investment.

China's Consumer Price Index is rising rapidly, and the Producer Price Index is falling rapidly. Such a dichotomy could not happen in another economy. In China, the two work together. As production loses money, more subsidies are needed to keep it afloat. Hence, governments will find opportunities to tax distribution. Hence, more PPI deflation and more CPI inflation.

Of course, the property bubble is much bigger than the water story in monetary terms. Its raison d'être is the same: to satisfy the government. Like all other unusual economic phenomena in China, it is a reflection of the government's supergravity.

Real reform is about limiting government power. No other reform is meaningful in the current context. As reforming the government is likely a long and slow process, China's bubble economy will run its course, exhausting all the available money and all the potential entities for borrowing. A hard landing at the end seems quite likely.
Title: Official Chinese Toast Thread: Helicopter Chen
Post by: RE on June 01, 2014, 12:22:13 PM
The Chinese are turning on the Printing Press!  This should be fun.

RE


China explores bond buying in first hint of QE (http://www.telegraph.co.uk/finance/china-business/10868381/China-explores-bond-buying-in-first-hint-of-QE.html)

Officials have been clamping down on credit to puncture the property bubble but are clearly having second thoughts as money supply weakens and bad debts accumulate

China explores bond buying in first hint of QE
The Chinese authorities may have to widen the range of possible options for “targeted monetary loosening”, including direct purchases of government bonds, financial and railroad debt

(http://i.telegraph.co.uk/multimedia/archive/02596/yuandollar_2596245b.jpg)

Photo: AP

By Ambrose Evans-Pritchard

5:20PM BST 01 Jun 2014

China’s central bank is exploring direct purchases of bonds and other assets to support key sectors of the economy in case the slowdown deepens, according to a leading Chinese business publication.

A front-page article in the China Securities Journal – regulated by the central bank – reported growing concerns about the weakness of the money supply and bad debts accumulating in the financial system.

The authorities may have to widen the range of possible options for “targeted monetary loosening”. These include surgical stimulus for the West and Central regions, as well as “direct asset purchases by the central bank”, mostly government bonds, financial and railroad debt, as well as state-backed housing bonds.

It is the first hint of quantitative easing in China, and has left analysts scratching their heads. The central bank has many other tools available that would normally be used first to combat incipient deflation. The Reserve Requirement Ratio (RRR) is still 20pc. This could be slashed to low single-digits if need be, generating up to $2 trillion of stimulus through higher lending.

Any move in this direction would be a radical policy shift. China has been clamping down on credit deliberately over recent months in order to slow the economy and puncture the property bubble before it becomes any more dangerous, but officials have clearly been having second thoughts for several weeks. Premier Li Keqiang announced a targeted cut in the RRR on Thursday, with lower rates for banks lending to agriculture and small business.

“Chinese-style’ QE is being considered, but would only happen after a sharper economic slowdown,” said Stephen Greene and Becky Liu from Standard Chartered.

They said the central bank is looking at all options except RRR cuts, and could circumvent a ban on direct financing of government debt by using intermediate buyers. One motive would be find a new source of stimulus as the central bank slows the accumulation of foreign reserves, a policy now deemed counter-productive as holdings near $4 trillion.

Standard Chartered said it would amount to “money printing”, and would be a remarkable turn of events given Beijing’s caustic comments about the “irresponsible” monetary policy of the US Federal Reserve.

“For the Chinese to consider domestic bond purchases would be a significant move,” said George Magnus, a senior adviser to UBS. The authorities might conclude that QE packs more punch than further RRR cuts, and would be a better way to steer stimulus directly into social housing or local government finances where it is most needed without reigniting the lending boom in the wrong places.

Analysts said there may be concerns that cuts in the RRR or other conventional forms of loosening would leak out into the shadow banking system, already over a quarter of China’s $25 trillion credit edifice. The central bank is looking at surgical tools, comparable to the Bank of England’s funding for lending in some respects. “What is significant about this is that QE is not being viewed as last resort, but as a possible way of injecting controlled stimulus,” said one expert.

The authorities seem willing to tolerate to lower growth so long as it does not lead to higher unemployment. This is now a risk as the property market deflates and building projects are cancelled. Construction makes up 10pc of employment directly, and almost 20pc indirectly. It generates 39pc of the government’s total tax revenue through land sales and taxes.

Home sales dropped in China’s 27 largest cities dropped 30pc in January from a year earlier. Inventory has risen above 24 months supply in nine of these cities, according to the property group Vanke.

Zhiwei Zhang from Nomura said the authorities are already switching gears, with the central bank injecting over $30bn a month into the economy through its relending facility, a loan scheme based on collateral. Combined measures amount to a “mini-stimulus” package worth 0.8pc of GDP, led by spending on water projects, railways, and the renovation of shanty towns, though it is small beer compared to the fiscal blitz after the Lehman crisis.“It should defer the risk of a hard landing to 2015,” said Mr Zhang.

The ministry of finance said on Wednesday that it was urging local governments to boost spending and speed up payments. “The economy faces pressure, and some difficulties cannot be underestimated,” it said.

All kinds of skeletons are coming out of the cupboard as the credit bubble deflates. Caixin Magazine reported this week that the state-backed shipping group Nanjing Tanker had been forced to delist from the stock exchange after hiding “a massive amount of debt off its balance sheets”.

Soho China, one of the country’s biggest property groups, caused consternation last week by comparing the Chinese housing market to the Titanic. “After hitting the iceberg, the risks will not only be in the real estate sector. The bigger risk will be in the financial sector,” said the group’s chief executive Pan Shiyi.

The collapse will infect the shadow banking system, causing havoc for trusts and wealth products. “When housing prices fall 20pc to 30pc, these problems will be all exposed,” he said.

There is an intense debate over whether deflation risks becoming lodged into the economy. Producer prices have fallen for the last 26 months, dropping by 2pc in April. Consumer price inflation has fallen to 1.8pc, far below the central bank’s de facto target of 3.5pc.

The balance sheet of the Chinese central bank has already grown enormously since 2008, matching the QE in the US, but it has done so by accumulating foreign bonds to hold down the yuan. Purchasing bonds internally would be leap in the dark, but strange things are happening in China’s economy.

The yuan has fallen 3pc against the US dollar this year. The longer this goes on, the more the suspicion grows that China is protecting the wafer-thin margins of its export industries by allowing the exchange rate to fall.

This is leading to grumbling in Washington and Brussels that China is exporting its excess capacity – and therefore deflation – to the rest of the world. Nobody can object to quantitative easing. Everybody is playing that game now.
Title: Re: Official Chinese Toast Thread
Post by: awesome-0-5000 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/ (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.
Title: Re: Official Chinese Toast Thread
Post by: awesome-0-5000 on August 24, 2014, 09:21:17 AM
http://www.bloombergview.com/articles/2014-08-15/has-china-lost-its-magic-wand (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.
Title: Re: Official Chinese Toast Thread
Post by: Karpatok 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
Title: Re: Official Chinese Toast Thread
Post by: Petty Tyrant 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.
Title: Chinese Toast: Hong Kong Riots
Post by: RE 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.

Title: Re: Chinese Toast: Hong Kong Riots
Post by: RE on September 28, 2014, 01:26:19 PM
http://www.youtube.com/v/w4q8fs8gTIs?feature=player_embedded


Great Livestreams over on ZH! (http://www.zerohedge.com/news/2014-09-28/disperse-or-we-fire-hong-kong-police-fire-tear-gas-protesting-students-live-webcast)  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.

Title: Re: Chinese Toast: Hong Kong Riots
Post by: RE 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 (http://www.zerohedge.com/news/2014-09-29/hong-kong-stocks-tumble-erase-ytd-gains-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)?
Title: Chinese Shadow Banking Collapse
Post by: RE 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:

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.

Title: Re: Official Chinese Toast Thread
Post by: RE on December 11, 2014, 12:26:48 AM
The Chinese are...

(http://thisisnotalovesong.files.wordpress.com/2007/07/toast.jpg)

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...

Title: Re: Official Chinese Toast Thread
Post by: roamer 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.
Title: Re: Official Chinese Toast Thread
Post by: RE 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
Title: Chinese Toast: More from the Reverse Engineering Archives
Post by: RE 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
Title: Re: Official Chinese Toast Thread
Post by: roamer 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. 


Title: Re: Official Chinese Toast Thread
Post by: RE 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
Title: THE GREATEST BONFIRE OF PAPER WEALTH IN ALL OF RECORDED HISTORY!
Post by: RE 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 (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
Title: Re: Official Chinese Toast Thread
Post by: jdwheeler42 on December 12, 2014, 01:09:07 PM
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.
Just remember, from the perspective of the baby, birth is the transition to a new life, but for the placenta, it means certain doom.
Title: Re: Official Chinese Toast Thread
Post by: azozeo on December 12, 2014, 01:12:02 PM
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.
Just remember, from the perspective of the baby, birth is the transition to a new life, but for the placenta, it means certain doom.

The caterpillar says "it's the end of the world", the butterfly says "it's only the beginning".....
Title: Re: Official Chinese Toast Thread
Post by: roamer on December 15, 2014, 11:32:28 PM

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

This comment seems to be sinking in with me and i'm finding myself again on better footing to simple observe and orient myself to what is actually happening.  I had been really having a bipolar relationship with sites like the dinner, on the one hand it is quite fascinating and intellectually stimulating to try to grapple with the large macro issues of our time and on the other it can lead to a really toxic emotional affect if you dwell and obsess and wish for a different outcome one way or another.  Just feel more and more like i'm here to observe learn and be as present as i can and not be fixated on outcomes.
Title: Chinese Toast: Banksters offer Mercedes for Deposits!
Post by: RE on December 31, 2014, 07:47:29 PM
How come they aren't giving away EVs?  ::)

RE

Forget Toasters & Spiderman Towels, Chinese Banks Lure New Deposits With iPhones & Mercedes

Tyler Durden's picture



 

Amid the European crisis in 2012, European banks reached deep deep down to encourage depositors to lodge their savings in these highly levered financial institutions. Most notably, now defunct Bankia, which offered no lesser gift than a Spiderman Towel in exchange for a EUR300 deposit. So, one wonders just how desperate they are - and just how close to total collapse - when Chinese banks are offering Mercedes Benz, iPhones, or a gold pendant to encourage cash as Bloomberg reports one analyst warns, "Chinese banks are hemorrhaging their deposits."

 

 

As Bloomberg Businessweek reports,

 
 

Banks in the U.S. once gave away toasters and irons to lure depositors. Banks in China are upping the ante. With customers pulling out money and putting it into higher-yielding investments, they are offering Mercedes, iPhones, and daily deliveries of vegetables to sidestep interest rate caps and get people to stash some yuan in savings accounts.

 

“Chinese banks are hemorrhaging their deposits,” says Rainy Yuan, an analyst at brokerage Masterlink Securities in Shanghai. China’s banks lost 950 billion yuan ($154 billion) of deposits in the three months through September, the first quarterly drop since 1999.

 

In the first 11 months of the year, new deposits were 23 percent lower than in the same period last year, People’s Bank of China data show. Offering incentives to attract money is not the solution, Yuan says: “There is no fix for this. All the efforts they made to win savers back will only push up the costs, so it’s a losing battle to fight.”

However, The China Banking Regulatory Commission in September banned what it called “illicit” deposit-gathering practices, including gifts and rebates on deposits, without clarifying whether product giveaways in lieu of interest payments qualify as gifts.

 
 

Banks that flout the curbs could face punishment, the regulator said. The warning hasn’t deterred banks.

 

The iPhone promotion, at a Beijing branch of Ping An Bank in October, offered a 128-gigabyte iPhone 6 Plus in lieu of interest payments for depositing 38,000 yuan for five years.

 

For parking 903,000 yuan for the same period, savers could pick one of four Mercedes-Benz models. A Mercedes A180, which costs 252,000 yuan, would give investors the equivalent of an annualized return of almost 7 percent, compared with the benchmark rate of 4 percent on five-year deposits.

In northern Shanxi province, Industrial Bank offered a gold pendant for a one-year deposit of 10,000 yuan.

 

Also in Shanxi, Citic Bank promised a daily supply of eggs and vegetables for three weeks to elderly customers who deposited 10,000 yuan, Shanxi Daily reported in November.

 

In Ningbo, Ping An Bank is giving cash instead of gifts. Savers can get 258,000 yuan of interest payments immediately when depositing 1 million yuan, or receive an interest-and-principal payment of 1.3 million yuan in five years. A spokesman for Ping An Bank declined to comment.

Liao Qiang, a director at Standard & Poor’s in Beijing warns, "The battle for deposits will only get worse as China moves ahead with interest rate liberalization, which will drive up banks’ funding costs and hurt profit."

*  *  *

We are sure this will all end well. Buy Chinese stocks (like everyone else)!

Title: Official Chinese Toast Thread: Ghost Factories
Post by: RE on January 02, 2015, 11:37:04 PM
Here's a few places that will NOT be buying Coal this year...

RE

http://www.youtube.com/v/9Od2Lw4U0FE?feature=player_embedded

China's "Illusion Of Prosperity" Exposed: Forget Ghost Cities, Meet Ghost Factories

Tyler Durden's picture



 

Having exposed the 20 1 charts of China's demise previously, we move to Exhibit (a) in the "illusion of prosperity" that keeps the dream (looking) alive to the outside (mostly Western get-rich-quick fast-money) world - China's Zombie Factories...

“There are large numbers of companies across China that should go bankrupt but haven’t done so,” says Han Chuanhua, a bankruptcy lawyer at Zhongzi Law Office, a Beijing legal practice.

 

“The government doesn’t want to see bankruptcy because as soon as companies go bust, unemployment spikes and tax revenues disappear. By stopping companies from going bankrupt, officials are able to maintain the illusion of local prosperity, economic growth and stable taxes.”

Here's Reuters from earlier last year...

 

This 'pretense' is occurring everywhere across the vast expanse of China, as The FT reports, similar experiences are playing out, with thousands of companies in heavy industrial sectors plagued by chronic overcapacity that should be going bust instead being propped up by local governments.

In the shadow of a group of enormous smokestacks and abandoned foundries, a peeling sign welcomes visitors to the Wenxi Steel Industrial Park.

 

But in the nearby village, the working-age men and many of the women have gone, leaving only the elderly and the very young.

 

“If you cut down the big tree, all the small trees around it will die,” says 69-year-old Wang Peiqing, referring to the collapse of Highsee Iron and Steel Group, which operated the foundries before its recent closure devastated the economy of a once-prosperous corner of Shanxi province in central China. “The entire region relied on the steel mill; now the young people have to go and look for work across China.”

 

Highsee stopped paying its 10,000 employees six months ago. Local officials estimate the plant supported indirectly the livelihood of about a quarter of Wenxi county’s population of 400,000. Highsee was the biggest privately owned steel mill in Shanxi, accounting for 60 per cent of Wenxi’s tax revenues. For those reasons, the local government was reluctant to allow the company to go out of business, even though it had been in serious financial difficulties for several years.

 

“By 2011 Highsee was already like a dead centipede that hadn’t yet frozen stiff with rigor mortis,” says one official who asks not to be named because he was not authorised to speak to foreign reporters.

 

“More than half the plant shut down, but it was still producing steel even though its suppliers wouldn’t deliver anything without cash up front and it was drowning in debt.”

It was only last month, four years after Highsee began to flounder, that the company was finally allowed by the government to initiate bankruptcy-­proceedings.

“The government’s plan is to sell off the plant quickly and restart production just like before, even though the steel market is in such bad shape,” says an official who asks not to be named.

 

“The problem is that it owes at least Rmb10bn [$1.6bn] and probably much more than that. We don’t know where we’ll find someone who can pay all that off.”

*  *  *

Some of the zombie factories... (Source: Reuters)

 

In the past month alone Chinese media have reported on at least nine large steel mills that appeared to be suspended in limbo after halting production but which are forbidden from going formally bankrupt.

The outstanding volume of non-performing loans in the Chinese banking sector has increased 50 per cent since the beginning of 2013, according to estimates from ANZ, the Australian bank, but the sector-wide NPL ratio remains extremely low, at just over 1.2 per cent.

 

In private, however, senior Chinese financial officials admit the real ratio is almost certainly much higher, obscured by local governments trying to prop up companies.

Read more here...

*  *  *

But apart from that... sure buy Chinese stocks, because well, they are going up...

Title: Chinese Toast Thread: The Chinese Roll CRAPS
Post by: RE on January 03, 2015, 02:37:04 AM
COME ON 7!  BABY NEEDS A NEW PAIR OF SHOES!

(http://s3.amazonaws.com/rapgenius/casino_craps.jpeg)

RE

What Macau Just Said About China’s Economy

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone

Few economic phenomena compare to the soaring gambling revenues in Macau since it opened up to foreign casino operators in 2001. In 2002, Macau blew past Las Vegas. It’s the only place in China where the Chinese can go and legally gamble away their money, and it’s one of the key places where they can go to syphon their wealth – however they’d obtained it – out of Mainland China and beyond the reach of the muscular arm of the government. Even during the financial-crisis years 2008 and 2009, Macau gaming revenues grew, despite a horrendous seven-month plunge. 2009 was the worst year on the books, with revenue growth of only 9.6%. The rest of the years, double-digit growth was the norm.

During the first five months of 2014, revenues soared 15.8%. Nothing could stop Macau, or so it seemed. But in June, Macau’s world changed with the first year-over-year revenue decline since the financial crisis. The soccer World Cup was blamed. VIP revenues, which used to account for 66% of total revenues, dropped an estimated 20%, a hole that increased marketing to regular folks couldn’t fill.

In July, the expected post-World Cup bounce failed to materialize. So they blamed the investigation of Zhou Yongkang, former head of state security, the most senior guy yet to be knocked down by the corruption crackdown that would go after “tigers and flies” alike. VIPs were suddenly taking the crackdown seriously, it was said. In August, revenues dropped again. The Taipei District Prosecutors Office had indicted the Taiwan branch of Macau casino operator Melco Crown Entertainment for alleged violations of banking and foreign-exchange laws.

Month after month, gambling revenues plunged, and new culprits were found each time: the prelude to Chinese President Xi Jinping’s visit to Macau in December; the pro-democracy protests in Hong Kong, just an hour away by ferry; Macau’s tighter visa regulations; new curbs on the UnionPay credit card with which gamblers can get around China’s currency controls, hitting mass-market Chinese gamblers more than VIPs; or the new smoking ban in casinos.

In November, it became known that Hong Kong had launched a money-laundering investigation into Cheung Chi-tai, one of Macau’s top VIP-junket figures, and seven of his closely held companies, the SCMP reported. Junket promoters are commissioned by the casinos to entice VIPs to Macau with a variety of services, such as evading China’s currency controls. Mr. Cheung has been one of the largest shareholders in a big junket operator, Neptune Guangdong Group. His assets were frozen under Hong Kong’s Organized and Serious Crimes Ordinance. It might have scared the bejesus out of VIPs.

In December, revenues plunged 30.4% from a year earlier, according to the Gaming Inspection and Coordination Bureau (DICJ), the worst decline in the history of its data going back to 2002. Pundits had expected a decline but not this “shocker.” It was the seventh month in a row of declines, matching the financial crisis record. Even after the glorious first five months, revenues for the year dropped 2.6% to 351.5 billion Macau patacas ($44 billion), the first revenue drop in the history of the data.

China-Macau-yoy-change-gaming-revenues-2014-dec

Shares of casino operators have gotten mutilated in the process, after their breath-taking multi-year rally: from their highs in early 2014, Sands China Ltd. dropped 44%, Wynn Macau 46%, Melco Crown Entertainment 50%, MGM China 46%, Galaxy Entertainment 49%, and SJM Holdings 55%. Junket operators have gotten hammered. The secondary effects are hitting high-end hotels, fancy restaurants, and vendors of luxury goods.

It didn’t help that Xi, while in Macau in December, suggested that it should diversify away from gambling.

But Macau isn’t about to give up on an activity that generates about 80% of its tax revenues. Casino operators are building even more casinos, such as the 3,000-room Parisian Macau with Eiffel Tower and all. This time the goal is to extract money from the mass-market Chinese, not VIPs – the “flies,” not the “tigers.”

By now, VIPs and the flies understand that the crackdown is serious business in China where corruption is the grease that makes the wheels turn. And removing the grease might make the already sputtering economy run a little rougher. Many of these “tigers” are connected to overleveraged industries dogged by overcapacity and faltering demand, such as the property sector, constructions, and heavy manufacturing that are now being put through the wringer of reality.

Even more troubling is a nasty correlation: Chinese GDP growth has been closely tracking Macau gaming-revenue growth since 2006, including the sudden cliff-dive during the financial crisis and the vertigo-inducing recovery afterwards, and at nearly every twist and turn since.

So they’re suddenly expected to decouple, with Macau gaming revenues in free fall, and the Chinese economy, where these missing high-rollers are making their money, growing at over 7%? Miracles do happen, but they’re rare.

More likely is that the Chinese economy is wheezing from the impact of lackluster demand, a credit bubble that is threatening to blow up, and a crackdown on corruption, the grease without which the economy has trouble functioning. The biggest beneficiaries of that system have gotten antsy and are reacting in a myriad ways. And Macau’s gaming revenues – just as they did during the financial crisis – show thermometer-like that the Chinese economy, despite official protestations, is turning cold.

2014 was a tough year for many currencies. Some declined as part of the currency war. But others got hammered for reasons of their own. Among the losers was one that left terrible value destruction in its wake. But it wasn’t the ruble. Read…  Worst Currency in 2014? (One You Might Actually Use)

Title: Re: Official Chinese Toast Thread
Post by: Petty Tyrant on January 03, 2015, 04:04:50 AM
I went to macau the asian version of monte carlo or monaco once and there are ONLY 5 star hotels nothing less, each has a huge casino, any one of them bigger than any other casino Ive seen anywhere else. I would guess they have easily 5 casinos that are each over a mile long and wide. Places like that are playgrounds only for the purpose of the upward funneling of all wealth to banksters and their bum chums to blow some, so should be doing better than ever now.
Title: Re: Official Chinese Toast Thread
Post by: RE on January 03, 2015, 04:29:13 AM
I went to macau the asian version of monte carlo or monaco once and there are ONLY 5 star hotels nothing less, each has a huge casino, any one of them bigger than any other casino Ive seen anywhere else. I would guess they have easily 5 casinos that are each over a mile long and wide. Places like that are playgrounds only for the purpose of the upward funneling of all wealth to banksters and their bum chums to blow some, so should be doing better than ever now.

Apparently not, according to Wolf.

Quote
So they’re suddenly expected to decouple, with Macau gaming revenues in free fall

RE
Title: Re: Chinese Toast Thread: The Real Reason Macau's Casinos Are Suddenly Empty
Post by: g on January 04, 2015, 07:12:40 AM
I don't agree with this article. Feel we are in a massive economic contraction presently. Posted as a point of interest on a recent Diner topic.


The Real Reason Macau's Casinos Are Suddenly Empty


A trip to the high-roller tables in Macau or Las Vegas strip casinos over the holidays revealed an unexpected, eerie (and terrifying if one is a bondholder in said casino) sight: empty chairs as far as the eye can see. Indeed, as Bloomberg reports [11], "Macau’s casinos just recorded their worst year, ending a decade of expansion that turned the former Portuguese enclave into the world’s biggest gambling hub. More tough times are ahead. Casino revenue in the city fell 2.6 percent to 351.5 billion patacas ($44 billion) in 2014, after a record 30.4 percent monthly drop in December, according to figures from Macau’s Gaming Inspection and Coordination Bureau today. Analysts projected a 2 percent annual decline, based on the median of nine estimates in a Bloomberg News survey."

    Casino revenue fell to 23.3 billion patacas in December for a seventh straight month of decline and the biggest drop since Macau began recording monthly figures in 2005. That compared with a median estimate of a 30 percent drop in a Bloomberg News survey of 11 analysts.

     

    Macau had posted its smallest annual casino revenue gain of 9.7 percent in 2009, after it began yearly records in 2002.

So what are the stated reasons? Chief among them: a crackdown on corruption by China's government, coupled with background checks on Macau gamblers.

    Chinese President Xi Jinping’s bid to catch “tigers and flies” in an anti-corruption drive and weaker economic growth means Macau may face shrinking revenue until at least mid-2015, when new resorts open. The crackdown has deterred high rollers who account for two-thirds of Macau’s casino receipts, and wiped out about $73 billion in market value of companies including Wynn Macau Ltd. and SJM Holdings Ltd. last year.

     

    “The VIP heyday is over,” said Philip Tulk, an analyst at Standard Chartered Plc in Hong Kong. “The anti-corruption crackdown doesn’t look to be a short-term phenomenon,” with funds flows between the mainland and Macau being much more closely scrutinized, he said.

Yes, there are concerns over corruption and embezzlement, which were capped when Macau implemented background checks for VIP gamblers, but a far bigger threat for Macau has been its abuse as a money-laundering mecca to which Beijing had turned a blind eye for many years but finally said enough. "Macau’s government has been curbing money flows to the territory over concern that illegal funds are being taken out of the mainland. It is restricting the use of China UnionPay Co.’s debit cards and its hand-held card swipers at casinos. Further clampdowns are expected with the help of banks."

To be sure, the crackdown on Macau "hot-money" meant that it was Las Vegas that emerged as a preferred money-laundering spot for Chinese billionaires. As we wrote previously [12], "as Macau has seen growth collapse, Las Vegas has seen Baccarat (the preferred game of China's rich) surge. In May, as Macau growth slumped, Las Vegas Baccarat surged over 85%. While slots (the staple indicator of the 99% in America) continues to decline (-4.4% in May), it seems rich foreigners are finding creative new ways to wash their money out of China.Macau had been the money-laundering center for Chinese elite: [13] "You don't actually buy anything," said Lai, standing near a half-empty display case containing a messy spread of watches and jewellery. "We just help people get money out of China so they can gamble more."

And yet, subsequent to the brief burst in Las Vegas Baccarat revenues in the summer, this too money-laundering alternative appears to have fizzled out, suggesting there is more to it than merely a corruption crackdown and a halt to money-laundering.

That something is simple: as noted repeatedly on these pages, even as China's economy has been careening dangerously to a hard-landing [14], its stock market has soared over the past six months.

(http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/12/20150102_SHCOMP.jpg)

Why? Beuase in addition to the PBOC quietly launching both a lite version of QE in the summer and cutting rates in November, something far simpler happened: China's habitual - and filthy rich - gamblers decided to move from point A to point B, namely from the dark-lit Macau gambling parlors to multiple-monitor lit trading desks.



(http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/12/Macau%20vs%20Stocks.jpg)
    While mainland regulators have eased regulations on investors using margin debt to buy shares, Macau’s government has tightened visa rules for Chinese visitors and cracked down on the use of UnionPay debit cards to bypass mainland currency controls. President Xi Jinping, who has spearheaded the anti-corruption campaign, is expected to visit Macau this month.

The bottom line:

    "Customers who used to wager on casino tables are probably now sitting at home betting on stocks,” said Tai Hui, Hong Kong-based chief Asia market strategist at JPMorgan Asset Management. “Investors are levering up on margin trading, or ‘using a small knife to cut a large tree.’"

And there you have it: why gamble in a casino when one can gamble in the just as rigged stock market?

As for tumbling casino stocks, all Macau needs to do is wait for the Shanghai Composite to crash as the latest equity bubble pops, and all those gamblers who made the track from Point A to Point B hoping to get rich quick, rush back to where they came from.

That, or perhaps it is time for UBS to rent out its massive, world's-biggest, trading floor in Stamford [18]to Wynn, or Sands or Galaxy or MGM. It's not like UBS uses it anyway.

Then again, probably not, because so much snarky commentary would be avoided if finally none other than Chinese billionaires were manning the trading terminals to the biggest rigged casino ever.

(http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/12/ubs%20trade%20floor%20stamford.jpg)

http://www.zerohedge.com/print/499845 (http://www.zerohedge.com/print/499845)  :icon_scratch:
Title: Ambrose SEZ: THE CHINESE ARE TOAST!
Post by: RE on January 10, 2015, 01:05:57 AM
Tomorrow, Ambrose will keyboard out an article which sez China is a fabulous place to invest and will be the Next Empire!  ::)

For today though, he got one right.

RE

Bank of America warns of 'lethal' damage to China's financial system as deflation deepens

'Deflation, Devaluation, and Default' loom in China this year. The denouement for Shanghai's bourse will not be pretty, says the US bank.

Xi Jinping, the Chinese president, emerges from a key Communist party meeting with a stronger mandate and new powers to sidestep his own government
Chinese President Xi Jinping, centre, during the the third Plenary Session of the 18th CPC Central Committee in Beijing Photo: AP/XINHUA
 

China is at mounting risk of a financial crisis this year as growth sputters and deflationary pressures trigger a wave of defaults, Bank of America has warned.

The US lender told clients that a confluence of forces are coming together that threaten to chill the speculative mania on the Shanghai stock exchange and to expose the underlying fragility of China’s $26 trillion edifice of debt.

“A credit crunch is highly probable,” said the bank in a report entitled “Deflation, Devaluation, and Default”, written by David Cui and Tracy Tian.

They said the country’s highly-leveraged companies cannot safely withstand President Xi Jinping’s drive to stamp out moral hazard and wean the country off excess credit, warning that the mix of slower growth and excess debt “could prove lethal for the financial system”.

The report warned that it is rare for countries to escape either a financial crisis, or major bank failures, a currency upset, a sovereign crisis – or a mix of these – after letting credit grow at such vertiginous rates.

“The most likely scenario is a bad debt surge as growth slows, followed by a credit crunch in the shadow banking system, followed by a major recapitalisation of the banks,” said Mr Cui.

The report said China spent 15pc of GDP to rescue lenders in the late 1990s but the scale of the problem is much greater today, and this time the government cannot resort to fresh stimulus so easily.

Loans have jumped by roughly 100pc of GDP in the past five years under most estimates. This is twice the pace of growth in Japan over a comparable period before the Nikkei bubble burst in 1990, or in the US before the Lehman crisis in 2008.

Standard Chartered said total credit has surpassed 250pc of GDP once shadow banking and offshore lending are included, an extremely high level for an emerging economy without mature markets or layers of accumulated wealth.

Mr Cui said the explosive rise on the Shanghai stock market - up 50pc in barely three months - is being driven by “blue-sky talk” and $180bn of margin lending from brokers. It is happening at a time of deteriorating earnings. “When the sell-off happens, we suspect that it will not be orderly,” he said. The Shanghai composite index may fall back from 3,300 to 2,400 before it settles in a trading range.

He advised investors to stick to defence stocks or equities linked to the nuclear industry given that both are shielded from Mr Xi’s efforts to shake out excessive capacity in Chinese industry.

Bank or America said China has been in factory gate deflation for 33 months and the downward slide appears to be deepening. “We believe stimulus-induced overcapacity is the main culprit,” it said.

China has been in producer price deflation before. The index plunged in the late 1990s and it took six years to reverse. All the problems are on a greater scale today, while the country is struggling to find a new “demand driver” to restore dynamism. There is nothing on the horizon comparable with China’s accession to the World Trade Organisation in 2001.

One of the side-effects of falling inflation is to raise the real cost of borrowing. The average one-year rate for companies has spiked from zero to 5.50pc in real terms since 2011. This amounts to drastic financial tightening, which the central bank has chosen not to offset, beyond a token 0.25pc cut in rates.

Bank of America said hot money outflows raise the risk of devaluation. This will drain money from the stock market and tighten the vice on those with dollar debts. Chinese firms have borrowed an estimated $1.2 trillion in external currencies, mostly through Hong Kong.

The relentless rise in the US dollar is pulling up the Chinese yuan along with it as a result of the China's "soft-peg". The yuan has soared 60pc against the Japanese yen in barely two years.

Diana Choyleva, from Lombard Street Research, said the yuan is 10pc to 20pc overvalued, warning that China has “lost its competitive edge” as wages race ahead of productivity. The real effective exchange rate based on unit labour costs has risen 40pc since 2008. She said investors are acutely alert to risks in the shadow banking system, but have overlooked the mounting threat of a liquidity crisis caused by currency effects.

Guan Qingyou, from Minsheng Securities, said hot money may so soon start to leave the country as the US Federal Reserve prepares to raise interest rates, sucking in funds from across the world.

"Capital outflow on a large scale may cause a currency crisis and this is what triggered the Asian Financial Crisis in 1997," he told Caixin Magazine. Trackers at the central bank say the capital account has been in deficit for the past two quarters.

At the end of the day, China has great economic depth and is likely to muddle through without too much trauma. The challenge for investors is judging how far Xi Jinping intends to go in clamping down on excess debt and over-investment before considering the job done, and then reverting to stimulus. He has not blinked yet.

Title: What we CANNOT "Learn" from Li Ka-Ching!
Post by: RE on January 19, 2015, 01:41:03 AM
If there is one Blogger on the net who makes me want to Heave the Technicolor YAWN every time I read one of his Sovereign Man Blogs, it is Simon Black.

(http://images2.fanpop.com/images/photos/2700000/Family-Guy-Puke-A-Thon-family-guy-2772560-513-386.gif)

In this blog, we are supposed to take Lessons from Li Ka-Shing, supposedly the Richest Man in Asia.  Li has apparently purchased for himself a Canadian Passport and is doing the best he can to take the money he stole in China and shift it over to "safe havens" like the Cayman Islands.

Precisely how many people can buy a Canadian Passport to start with?  Then how many can move $Millions$ if not $Billions" to foreign bank jurisdictions?

What exactly is even the moderately wealthy Texas Dentista for instance supposed to LEARN from Li KA-CHING?!?

Absolutely the stupidest stuff out there on the net in terms of Collapse Prep, for anybody except the .001%.

RE

What We Can Learn From The Richest Man In Asia
(http://www.zerohedge.com/news/2015-01-18/what-we-can-learn-richest-man-asia)

Submitted by Tyler Durden on 01/18/2015 20:45 -0500

    B+
    China
    Hong Kong
    Real estate
    Renminbi
 

Submitted by Simon Black via Sovereign Man blog,

It was nine months ago when we reported that Li Ka-shing, the richest man in Asia, had sold all of his major assets in China.

In 2013 when he started dumping his Chinese property holdings he was being ridiculed and criticized. Everyone was bullish on China’s real estate market.

It turns out you don’t want to bet against a man with a track record like Li’s.

Li Ka-shing’s grasp for major trends is unmatched. And he demonstrated his shrewdness and insight yet again when China’s real estate market went into correction mode last year.

He got out right at the peak of the market.

He recognized that China’s major credit bubble isn’t sustainable. Behind closed doors, the bosses in Beijing know it too.

A recent report by the chief economist at the Bank of Singapore reveals that the Chinese leadership is desperately trying to conceal the effects of excessive credit and engineer a ‘soft landing’.

And yet Chinese credit expansion continues.

Data from the Bank of International Settlements shows that in 2014 credit expansion’s share of GDP growth soared by 14%.

Since the end of 2008, credit expansion has accounted for 79% of China’s GDP growth.

Historical data and analysis shows that such levels of credit expansion inevitably lead to a lot of bad debts that can’t be repaid.

We’ve already seen first ever Chinese corporate defaults as a result of these policies, and we can expect more.

The long-term trend for China is of course, positive, but this doesn’t mean it’s going to be a smooth ride along the way. Nothing goes up or down in a straight line.

Right now, renminbi assets are falling and renminbi is weakening. Capital is fleeing China in fear of a major credit crunch.

Li was one of the first to spot this trend, and he got out.

Moreover, he’s hedging his bets across the board.

His most recent move is to restructure his investment companies and move them to the Cayman Islands.

 

Li is being very prudent– moving his money and his assets far away to safe, stable locations so that no single government has control over him.

Until now he was very much dependent on a single jurisdiction. He resides in Hong Kong and has Hong Kong SAR citizenship. His business interests were centered in Hong Kong and China as well.

Now, Hong Kong is an incredible place. The banks are well-capitalized, the government is solvent, and there’s a lot of economic opportunity.

But no matter how safe you think your home country might be, it NEVER makes sense to be completely dependent on one place.

Li understands that. Hedging your bets is crucial.

He has already acquired a second passport (Canada), and now he’s moving certain business interests and cash assets abroad.

In doing so, Li is also making sure that the wealth he worked to build over his entire life will be properly safeguarded for his family.

It’s hard to imagine he’ll be worse off for doing any of this. And if the worst happens, Li will be much better off for following his instincts.

This is good advice for anyone.

Remember: rational, successful people have a Plan B.

Rational, successful people take steps to minimize their downside risk.
Title: Re: Official Chinese Toast Thread
Post by: Eddie on January 19, 2015, 04:30:16 AM
Just like a lot other people, Simon Black's interest is in making a buck off the fear factor and not much else. I looked into the whole offshoring thing years ago. Unless you have really big money, it's not only a huge up front expense, it's an ongoing one, and you have to put your faith in people I wouldn't ordinarily feel comfortable with.

It's about selling information to people who think they need it, but really don't. Like the Casey newsletters and others I could name.
Title: Railroad to Nowhere
Post by: RE on January 22, 2015, 11:14:46 PM
Obviously, the Chinese have not grasped that every Railroad ever built went Bankrupt and has to be subsidized to keep running at all.

WTF do you need a High Speed Rail line to get you from Moscow to Beijing in 30 hours?  How many Oligarchs need to make this commute on any given day, and who else can afford the train fare?

The stupidity continues to be astounding, including the Tyler Durdens who think this is just great evidence of the Sino-Ruskie economic alliance.  This is ridiculous.  It's yet more malinvestment and a complete waste of resources, on a project that has little chance of being completed and little utility if it is completed.

RE

More Isolation? Russia, China To Build $240 Billion High-Speed Rail Link

Tyler Durden's picture



 

The ongoing 'isolation' of Russia took another turn for the un-isolated-er today when, as Bloomberg reports, China will build a 7,000-kilometer (4,350-mile) high-speed rail link from Beijing to Moscow, at a cost of 1.5 trillion yuan ($242 billion), Beijing’s city government said. The rail-link - which will bring travel time between Beijing and Moscow down from 5 days to 30 hours - signals a 10-year partnership between the two nations and follows the dropping of the French company, Alstom, from the project.

 

As Bloomberg reports,

 
 

China will build a 7,000-kilometer (4,350-mile) high-speed rail link from Beijing to Moscow, at a cost of 1.5 trillion yuan ($242 billion), Beijing’s city government said on the social networking site Weibo.

 

The rail line seeks to facilitate travel across Europe and Asia, Beijing’s municipal government said Jan. 21 in a post on Weibo, China’s equivalent of Twitter. The journey from Beijing to Moscow would take “two days” on a route passing through Kazakhstan, the post said.

 

 

 

 

The proposed rail line comes as Russia’s economy struggles to recover from the fall in the price of crude oil and as relations with the U.S. and Europe deteriorate over the Ukraine conflict, and as China pushes to market its high-speed rail technology internationally.

 

The rail line was mooted in November, after Russia and China last year agreed on the largest natural-gas supply deal in history. Alexander Misharin, a first vice-president at state-owned OAO Russian Railways, said in a Nov. 18 interview that the plan would cost $60 billion to reach Russia’s border, and would cut the Beijing-Moscow journey from five days to 30 hours.

 


 

The link to Beijing would take eight to 10 years to build, Misharin said in November.

*  *  *

And would enable a new longest rail journey on earth...

 

 

But, as Malaysia Chronicle notes, not everyone's a winner,

 
 

The building of the huge project to China Railway High-speed (CRH), a subsidiary of the state-controlled China Railway (CR).

 

They will work with the local firm Uralvagonzavod after deciding to drop the French company, Alstom, from the project, one of the world’s leading high speed train manufacturers.

*  *  *

And follows more unisolated-er activity...

 
 

In May, after more than a decade of talks, natural-gas exporter OAO Gazprom reached a $400 billion deal with China to build a pipeline and start supplies. Misharin, in the November comments, compared the new transport network to the Suez Canal “in terms of scale and significance.”

 

Those comments came a month after a delegation to Moscow led by Chinese Premier Li Keqiang signed accords that included high-speed rail cooperation, a three-year 150 billion yuan ($24 billion) local-currency swap deal and a double-taxation treaty.

*  *  *

Now who's isolated?

Title: Re: Official Chinese Toast Thread
Post by: alan2102 on January 23, 2015, 04:51:39 PM
RE: "WTF do you need a High Speed Rail line to get you from Moscow to Beijing in 30 hours?"

Surely you jest, RE.

Fundamental transport infrastructure of this kind is essential for development of the entire Eurasian continent. In its wake will be a great economic/developmental boom of tidal power lasting many decades. This is epochal, history-making stuff going on right in front of our noses.

I assure you that it WILL be completed, and in an unbelievably short time. In the West, we spend 20 years just TALKING about building 500 miles of high-speed rail. In Eurasia, they've ACTUALLY BUILT 5000 miles in the last 10 years. It is incredible. And it is the precise opposite of "malinvestment", being rather very wise investment that will pay for itself many times over in the developmental impact over decades.

Forget Zerohedge when it comes to understanding China and BRICS and Eurasia. They just Don't Get It (DGI), and probably never will until the Chinese OWN our asses (which may not be far off).

Read these two articles carefully. They are quite different. Engdahl's (the second) is more scholarly and information-dense; WW's (the first) is visually impressive and evocative. They're both saying basically the same thing.

http://thewealthwatchman.com/moscow-just-took-a-quantum-leap-into-the-future/ (http://thewealthwatchman.com/moscow-just-took-a-quantum-leap-into-the-future/)
Moscow Just Took a Quantum Leap Into the Future
October 22, 2014

http://www.marketoracle.co.uk/Article34366.html (http://www.marketoracle.co.uk/Article34366.html)
China's Land Bridge to Turkey Creates New Eurasian Geopolitical Potentials
Apr 28, 2012 - 05:03 AM
By: F_William_Engdahl

....................

Oh btw, RE: weren't you lamenting somewhere in years past about the dearth of large-scale public works or infrastructure projects?  Well, start paying some attention for a change! ENORMOUS, MIND-BOGGLING-scale infrastructure and public works projects are going on as we speak, and have been for years, in Eurasia, especially China. The trans-Eurasian land bridge (high speed rail) is one prominent -- but far from the only -- example. The Eurasians, most notably the Chinese (though I expect India to soon pick up the slack), are building a dazzling new civilization, and most Westerners fail to see and comprehend it.  This is to some extent understandable. It is difficult to comprehend, because in some respects it is unique in history. It would be nice to think that you, RE -- YOU, who pride yourself on being a big-thinker with futuristic vision and understanding -- might actually attempt to comprehend it, rather than merely posting silly nonsense like pictures of a few abandoned factories -- as though that proved (or even MEANT) anything.

I recommend to  you this recent book, which is available free. (Below). SERIOUSLY. I HIGHLY RECOMMEND IT, if you wish to know something about China and Eurasia.

The author points out, amusingly, that the very numerous predictions of China's imminent collapse have all, themselves, collapsed. One cannot help but chuckle at the way in which doomerism is itself doomed.

http://onmirror.com/dluvbmz165wr/The_China_Wave.pdf.html (http://onmirror.com/dluvbmz165wr/The_China_Wave.pdf.html)
http://depositfiles.com/files/7wc4wjelp (http://depositfiles.com/files/7wc4wjelp)

The China Wave: Rise of a Civilizational State

By Zhang Weiwei

from the introduction:

many China-watchers in the West to confidently crystal-ball a pessimistic future for China: the regime would collapse after the Tiananmen event in 1989; China would follow in the footsteps of the Soviet Union in its disintegration; chaos would engulf China after Deng Xiaoping's death; the prosperity of Hong Kong would fade with its return to China; the explosion of SARS would be China's Chernobyl; China would fall apart after its WTO entry; and chaos would ensue following the 2008 global financial tsunami. Yet all these forecasts turned out to be wrong: it is not China that has collapsed, but all the forecasts about China's collapse that have "collapsed". This unimpressive track record of crystal-balling China's future reminds us of the need to look at this huge and complex country in a more objective way, and perhaps with an approach adopted by the great German philosopher G. W. Leibniz (1646-1716) to focus on how the Chinese developed what he called "natural religion" or the secular application of ethics and political philosophy to social, economic and political governance. If we are freed from ideological hangups, we may come to see that what has happened over the past three decades in China is arguably the greatest economic and social revolution in human history: over 400 million people have been lifted out of poverty, with all the implications of this success for China and the rest of the world.

Interestingly, while China, following a model not endorsed by the West, stuns the world with its rapid reemergence, a sizable number of Chinese at home are not yet convinced. Some believers in the Western political and economic systems still hold that China will eventually fail if it is unwilling to follow the Western model. Yet no fair-minded person with a decent knowledge of world affairs today would turn a blind eye to China's rise. While the China model of development is by no means perfect, China's overall success is arguably unmatched by any developing or transitional economies that have copied the Western model, and this success has indeed taken most countries by surprise.

The China model has taken shape in the midst of global turbulence and competition. It is therefore resilient and competitive and unlikely to fall apart easily. With further improvements, the model's future is promising. From a long-term historical perspective, China's rise, at least to this author, is not that of an ordinary country, but the rise of a civilizational state (᭛ᯢൟ೑ᆊ).

This rise is unprecedented in human history. If the ancient civilizations of Egypt, Mesopotamia, the Indus Valley and Greece had continued till the present day and functioned within unified modern states, they would also be described as civilizational states. But this opportunity has been lost. If the ancient Roman Empire had stayed united till now and transformed into a modern state, Europe could also be a medium-sized civilizational state. But this is only a hypothesis. If dozens of countries of the Islamic world today could integrate into a unified modern state despite all their diverse traditions, it would also be a civilizational state with over 1 billion people. But this seems an unlikely prospect. Indeed, China is now the only country in the world which has amalgamated the world's longest continuous civilization with a huge modern state.
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on January 23, 2015, 06:22:29 PM
But WAIT! R.E. is RIGHT!

China's 2014 GDP took a CATASTROPHIC hit -- from 7.7% growth in 2013 all the way down to 7.3% last year! We're talking a 6% decline in the growth rate, sufficient to assure China's utter collapse into permanent obscurity and ruin!  And those pictures of two abandoned factories and a rusty car door in a field provide further PROOF of China's hopeless situation!


(https://qzprod.files.wordpress.com/2015/01/china-s-annual-gdp-growth-growth_chartbuilder.png?w=1024)


 :D  :D  :D  :D
Title: Official Chinese Toast Thread: Renminby under ATTACK!
Post by: RE on January 25, 2015, 07:49:18 PM
You think the SNB breaking the Swissie peg to the Euro is rough?

Wait till the Chinese break the Yuan peg to the Dollar.  ALL FUCKING HELL BREAKS LOOSE.

Renminby value is completely artificial, and the PBoC cannot maintain that peg forever, anymore than the SNB could.

Getting interesting now.

RE

Chinese Currency Plunges To Peg Limit Against USDollar, Strongest Against Euro In 14 Years

Tyler Durden's picture



 

The drop in the Yuan over the past 2 days is the largest against the USDollar since Nov 2008 as USDCNY nears its highest (CNY weakest) since mid-2012. What is more critical is that for the first time since the new 2% CNY peg bands, USDCNY is trading at the extremes - 11.5 handles cheap to the fix. At the opposite end of the spectrum, the EURCNY just dropped below 7.00 for the first time since June 2001 with the biggest 2-day strengthening of the Chinese currency against the Euro in almost 4 years. It appears the consequences of ECB QE, SNB volatility, and now Greek concerns continue to ripple through the rest of the world.. and at a time when China faces its ubiquitous new year liquidity squeeze, that is not a good sign.

Biggest 2-day drop in the Yuan against the USDollar since 2008

 

With USDNCY puishing against its 2% peg band for the first time...

 

As the Yuan shifts to its strongest against the Euro since 2001 (almost 2000) - back below 7.000

 

Title: Re: Official Chinese Toast Thread
Post by: RE on January 25, 2015, 11:14:45 PM
The Chinese are...

(http://galleryplus.ebayimg.com/ws/web/271198627944_1_0_1/1000x1000.jpg)

RE

[html]<div id="squeeze-content">
<div id="inner-content">
<h1 class="title">Shocking Images Of China's Dire Pollution Problem</h1>
<div class="node">
<div class="picture"><a title="View user profile." href="http://www.zerohedge.com/users/tyler-durden"><img title="Tyler Durden's picture" src="http://www.zerohedge.com/sites/default/files/pictures/picture-5.jpg" alt="Tyler Durden's picture" />[/url]</div>
<span class="submitted">Submitted by Tyler Durden (http://www.zerohedge.com/users/tyler-durden) on 01/25/2015 22:00 -0500</span>


<ul class="links inline">
<li class="taxonomy_term_139 first"><a title="China" href="http://www.zerohedge.com/taxonomy_vtn/term/139" rel="tag">China[/url]</li>
<li class="taxonomy_term_12348"><a title="" href="http://www.zerohedge.com/taxonomy_vtn/term/12348" rel="tag">France[/url]</li>
<li class="taxonomy_term_8300"><a title="" href="http://www.zerohedge.com/taxonomy_vtn/term/8300" rel="tag">Germany[/url]</li>
<li class="taxonomy_term_8436"><a title="" href="http://www.zerohedge.com/taxonomy_vtn/term/8436" rel="tag">Japan[/url]</li>
<li class="taxonomy_term_10857 last"><a title="" href="http://www.zerohedge.com/taxonomy_vtn/term/10857" rel="tag">Shenzhen[/url]</li>
</ul>
<div class="js-links">
<div class="js-l1" style="margin-right: 10px;">&nbsp;</div>
<div class="js-l1" style="margin-right: 10px;"><span class="IN-widget" style="line-height: 1; vertical-align: baseline; display: inline-block; text-align: center;"><span style="padding: 0px ! important; margin: 0px ! important; text-indent: 0px ! important; display: inline-block ! important; vertical-align: baseline ! important; font-size: 1px ! important;"><span id="li_ui_li_gen_1422255674282_0"><a id="li_ui_li_gen_1422255674282_0-link"><span id="li_ui_li_gen_1422255674282_0-logo">in</span><span id="li_ui_li_gen_1422255674282_0-title"><span id="li_ui_li_gen_1422255674282_0-title-text">Share</span></span>[/url]</span></span><span style="padding: 0px ! important; margin: 0px ! important; text-indent: 0px ! important; display: inline-block ! important; vertical-align: baseline ! important; font-size: 1px ! important;"><span id="li_ui_li_gen_1422255674295_1-container" class="IN-right"><span id="li_ui_li_gen_1422255674295_1" class="IN-right"><span id="li_ui_li_gen_1422255674295_1-inner" class="IN-right"><span id="li_ui_li_gen_1422255674295_1-content" class="IN-right">8</span></span></span></span></span></span></div>
</div>
<div class="clear-block clear">&nbsp;</div>
<div class="content">
<p>China has some stunningly beautiful natural landscapes, but, as boredpanda.com explains, (http://www.boredpanda.com/pollution-china/) they may not count for much when, <strong>in other parts of the country, pollution runs totally unchecked</strong>. China is very close in size to the USA.&nbsp; Yet, as The Burning Platform notes, (http://www.theburningplatform.com/2015/01/25/pictorial-essay-china-stinks-no-really-china-stinks/) their population is the size of the entire Western Hemisphere, plus Japan, Germany, and France. <strong>The land can not support this mass of humanity without very dire consequences</strong>, and these shocking photos show what severe pollution people have to deal with in some parts of China...</p>
<p>&nbsp;</p>
<p>==============================================</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-1__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Boy Swims In Algae-Filled Water, Qingdao, Shandong</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-2__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Journalist takes a sample of red polluted water in the Jianhe River in Luoyang</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-3__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Heavily Polluted River</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-4__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Pollution from a factory in Yutian, 100km east of Beijing</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-5__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Fishermen row a boat in the algae-filled Chaohu Lake in Hefei, Anhui province</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-6__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Fishermen clean up oil at an oil spill site near Dalian Port, Liaoning province</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-7__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Smog In Beijing</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-8__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Fisherman Covered In Algae, Chaohu Lake</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-9__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Heavily Polluted River</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-10__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Smog In Beijing</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-11__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Child Swims In A Polluted Reservoir, Pingba</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-12__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Worker cleans away dead fish at a lake in Wuhan, central China&rsquo;s Hubei province</strong></span></p>
</div>
<p>&nbsp;</p>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-13__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Workers clean up floating garbage on the Yangtze Rive</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-15__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Heavily Polluted River In Jiaxing, Zhejiang</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-16__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>child is reflected in a drainage ditch as he jumps over trash at a village which will soon be demolished</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-17__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Buildings In Beijing Surrounded By Smog</strong></span></p>
</div>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-19__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Factory Polluting The Air</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-20__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Fisherman fills his cupped palms with water from the algae-filled Chaohu Lake</strong> </span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-21__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Fishermen Collecting Fish In A Polluted Canal, Beijing</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-25__880.jpg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>A woman collects plastic bottles near a river where water is polluted with a reddish dye in Dongxiang</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-29__880.jpeg)

<p class="wp-caption-text">Workers collect dead fish at a park in Shenzhen, Guangdong province,</p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/china-bad-pollution-climate-change-30__880.jpeg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Child drinks water near a stream in Fuyuan county, Yunnan province</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/XX-Photos-Showing-How-Bad-Pollution-In-China-Really-Is__880.jpeg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Flies Gather On Railings Because Of Polluted Water, East Lake, Wuhan</strong></span></p>
</div>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/XX-Photos-Showing-How-Bad-Pollution-In-China-Really-Is4__880.jpeg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Girl collects water from a puddle at a dried-up reservoir as her father stands beside her in Baofeng county</strong></span></p>
</div>
<p>&nbsp;</p>
<div class="wp-caption alignnone" style="width: 595px;">(http://static.boredpanda.com/blog/wp-content/uploads/2015/01/XX-Photos-Showing-How-Bad-Pollution-In-China-Really-Is3__880.jpeg)

<p class="wp-caption-text"><span style="color: #ff0000;"><strong>Boy tries to avoid scattered rubbish floating on a flooded street in Shantou, Guangdong province</strong></span></p>
</div>
<p>*&nbsp; *&nbsp; *</p>
</div>
</div>
</div>
</div>
Title: Re: Official Chinese Toast Thread
Post by: g on January 26, 2015, 02:12:43 AM
Dear Lord, What horrible pictures.

They should be triple XXX rated.

Definitely are truly environmental pornography.  :-\ :-\

Title: Re: Official Chinese Toast Thread
Post by: RE on February 02, 2015, 01:14:15 AM
Toast...

RE

Chinese Stocks Tumble To Worst 3-Week Slump In A Year As Yuan Plunges To Record Discount

Tyler Durden's picture



 

On the heels of worse than expected Manufacturing PMIs (both indicating economic contraction) and the "taking away" of Minsheng Bank's CEO in a clear signal that the corruption probe is refocusing on the banking industry, Chinese stocks and currency are tumbling. Retail investors dreams are going up in smoke as the Shanghai Composite suffers its biggest 3-week loss in over a year and tumbles to a 3.8% loss year-to-date - not what the gambling 'investors' were expecting. But perhaps more worryingly for Chinese officials is the continued selling pressure on the Yuan - now at a record 1.94% discount to PBOC's fixing - very close to forcing intervention of decision time on a wider peg-band or even more free-floating currency.

 

Chinese stocks down over 2% at the open - lost all 2015 gains...

 

With the biggest 3-week loss since early 2014...

 

As the Yuan keeps getting sold...

 

In spite of the government's warning to NOT BUY DOLLARS.

 

Charts: Bloomberg

Title: Re: Official Chinese Toast Thread
Post by: RE on February 04, 2015, 11:14:44 PM
I mentioned the Chinese will be forced to remove the Dollar peg and devalue here pretty soon.  This will make the SNB move seem like a Sunday picnic.

RE

Devaluation by China is the next great risk for a deflationary world

China is not alone in facing a dilemma as deflation spreads and beggar-thy-neighbour currency wars become the norm

     
32
     
132
     
0
     
18
     
182
 
Email
 
A clerk counts Chinese currency notes at a bank branch in Huaibei in central China's Anhui province
Image 1 of 3
The 50-point cut in the RRR from 20pc to 19.5pc injects roughly $100bn into the Chinese financial system Photo: AP
 
 

China is trapped. The Communist authorities have discovered, like the Japanese in the early 1990s and the US in the inter-war years, that they cannot deflate a credit bubble safely.

A year of tight money from the People's Bank and a $250bn crackdown on shadow banking have pushed the Chinese economy close to a debt-deflation crisis.

Wednesday's surprise cut in the Reserve Requirement Ratio (RRR) - the main policy tool - comes in the nick of time. Factory gate deflation has reached -3.3pc. The official gauge of manufacturing fell below the "boom-bust" line to 49.8 in January.

Haibin Zhu, from JP Morgan, says the 50-point cut in the RRR from 20pc to 19.5pc injects roughly $100bn into the system.

This will not, in itself, change anything. The average one-year borrowing cost for Chinese companies has risen from zero to 5pc in real terms over the past three years as a result of falling inflation. UBS said the debt-servicing burden for these firms has doubled from 7.5pc to 15pc of GDP.

Yet the cut marks an inflection point. There will undoubtedly be a long series of cuts before China sweats out its hangover from a $26 trillion credit boom. Debt has risen from 100pc to 250pc of GDP in eight years. By comparison, Japan's credit growth in the cycle preceding its Lost Decade was 50pc of GDP.

The People's Bank may have to cut all the way to zero in the end - a $4 trillion reserve of emergency oxygen - but to do that is to play the last card.

Wednesday's trigger was an amber warning sign in the jobs market. The employment component of the manufacturing survey contracted for the 15th month. Premier Li Keqiang targets jobs - not growth - and the labour market is looking faintly ominous for the first time.

Unemployment is supposed to be 4.1pc, a make-believe figure. A joint study by the International Monetary Fund and the International Labour Federation said it is really 6.3pc, high enough to cause sleepless nights for a one-party regime that depends on ever-rising prosperity to replace the lost elan of revolutionary Maoism.

Whether or not you call it a hard-landing, China is struggling. Home prices fell 4.3pc in December. New floor space started has slumped 30pc on a three-month basis. This packs a macro-economic punch.

A study by Jun Nie and Guangye Cao for the US Federal Reserve said that since 1998 property investment in China has risen from 4pc to 15pc of GDP, the same level as in Spain at the peak of the "burbuja". The inventory overhang has risen to 18 months compared with 5.8 in the US.

The property slump is turning into a fiscal squeeze since land sales make up 25pc of local government money. Zhiwei Zhang, from Deutsche Bank, says land revenues crashed 21pc in the fourth quarter of last year. "The decline of fiscal revenue is the top risk in China and will lead to a sharp slowdown," he said.

The IMF says China's fiscal deficit is nearly 10pc of GDP once land sales are stripped out and all spending included, far higher than generally supposed. It warned two years ago that Beijing was running out of room and could ultimately face "a severe credit crunch".

The gears are shifting across the Chinese policy spectrum. Shanghai Securities News reported that 14 Chinese provinces are preparing a $2.4 trillion blitz on infrastructure to combat the downturn, a reversion to the same policies of reflexive stimulus that President Xi Jinping forswore in his Third Plenum reforms.

How much of this is new money remains to be seen but there is no doubt that Beijing is blinking. It may be right to do so - given the choice of poisons - yet such a course stores up even greater problems for the future. The China Development Research Council, Li Keqiang's brain-trust, has been shouting from the rooftops that the country must take its post-debt punishment "as soon possible".

China is not alone in facing this dilemma as deflation spreads and beggar-thy-neighbour currency wars become the norm. Fifteen central banks have eased monetary policy so far this year.

Denmark's National Bank has cut rates three times in two weeks to -0.5pc in an effort to defend its euro-peg, the latest casualty of the European Central Bank's €1.1 trillion quantitative easing. The Swiss central bank has been blown away.

Asia is already in a currency cauldron, eerily like the onset of the 1998 crisis. The Japanese yen has fallen by half against the Chinese yuan since Abenomics burst upon the Pacific Rim. Japanese exporters pocketed the windfall gains of devaluation at first to boost margins. Now they are cutting prices to gain export share, exporting deflation.

China's yuan is loosely pegged to a rocketing US dollar. Its trade-weighted exchange rate has jumped 10pc since July. This is eroding the wafer-thin profit margins of Chinese companies and tightening monetary conditions into the downturn.

David Woo, from Bank of America, says Beijing may be forced to join the currency wars to defend itself, even though this variant of the "Prisoner's Dilemma" leaves everybody worse off. "We view a meaningful yuan devaluation as a major tail-risk for the global economy," said.

If this were to happen, it would send a deflationary impulse worldwide. China spent $5 trillion on fixed investment last year, more than Europe and America combined, increasing its overcapacity in everything from shipping to steels, chemicals and solar panels, to even more unmanageable levels.

A yuan devaluation would dump this on everybody else. It would come at a moment when Europe is already in deflation at -0.6pc, and when Britain and the US are fast exhausting their inflation buffers as well.

Such a shock would be extremely hard to combat. Interest rates are already zero across the developed world. Five-year bond yields are negative in six European countries. The 10-year Bund has dropped to 0.31. These are no longer just 14th century lows. They are unprecedented.

My own guess is that we would have to tear up the script and start printing money to build roads, pay salaries and fund a vast New Deal. This form of helicopter money, or "fiscal dominance", may be dangerous, but not nearly as dangerous as the alternative.

China faces a Morton's Fork. Li Keqiang has made it his life's mission to stop his country drifting into the middle income trap. He says himself that the investment-led model of past 30 years is obsolete. The low-hanging fruit of catch-up growth has been picked.

For two years he has been trying to tame the state's industrial behemoths, and trying to wean the economy off credit. Yet virtuous intent has run into cold reality. It cannot be done. China passed the point of no return five years ago.

Title: Re: Official Chinese Toast - Chinese Rating Chief Say's China a West are Toast
Post by: g on February 05, 2015, 10:52:22 AM
World heading for financial crisis worse than in 2008 — China’s Dagong rating agency head  :-\

  A setback in the growth model focused on credit-based consumption may become a source of a new crisis


                                          (http://photocdn4.itar-tass.com/width/744_b12f2926/tass/m2/en/uploads/i/20150204/1081555.jpg)

 BEIJING, February 4. /TASS/. The world economy may slip into a new global financial crisis in the next few years, China’s Dagong Rating Agency Head Guan Jianzhong said in an interview with TASS news agency on Wednesday.

"I believe we’ll have to face a new world financial crisis in the next few years. It is difficult to give the exact time but all the signs are present, such as the growing volume of debts and the unsteady development of the economies of the US, the EU, China and some other developing countries," he said, adding the situation is even worse than ahead of 2008."

"The current crisis in Russia is caused by Western countries’ sanctions rather than internal factors. If we look at the US and the EU countries, their crises were caused by internal and not external factors," the president of China’s Dagong rating agency said.

"As distinct from Russia, the scope of crediting in these countries exceeded the potential for the production of goods and created a bubble. This crisis was transmitted to the entire world through the policy of quantitative easing and the use of the printing press. All the countries had to pay for that," he said.

A setback in the growth model focused on credit-based consumption may become a source of a new crisis, he said.

"Developed countries, including the US and the EU, remain the main consumers. But these countries develop only if there is consumer demand while the main potential for this consumption is based on borrowings. The US, the EU and Japan are increasing consumption through growth in crediting, which poses a risk," he said.

Some emerging market countries have also been increasing consumption through crediting in recent years and the global economy has been based on the model that promotes consumption through funds that will be earned in the future," the head of China’s Dagong rating agency said.
 
http://itar-tass.com/en/economy/775374 (http://itar-tass.com/en/economy/775374)  :icon_study:
Title: Official Chinese Toast Thread: Islands to Nowhere
Post by: RE on February 24, 2015, 01:58:38 AM
Not satisfied with building Ghost Cities, the Chinese are now building new islands in the South China Sea!  ::)

Never mind low lying islands all over the Pacific are already going underwater, and half a dozen Typhoons roll through this territory now every year.  They just HAVE to have some airbases there to control all the future oil they figure is under there somewhere.

Fucking insanity.

RE

What Is China Building In The South China Sea?

Tyler Durden's picture



 

Submitted by Ethan Rosen via BellingCat.com,

The South China Sea contains some of the planet’s most disputed territory. Six countries - China, Taiwan, Vietnam, Malaysia, the Philippines, and Brunei - are squaring off as they compete over the rights to the sea.

The dispute centers on the contested Spratly Island Chain, a hodgepodge of small islands and submerged reefs which lie near the center of the South China Sea. All but Brunei have built military outposts in the Spratlys, and all of these countries minus China have built military airstrips on the islands. China, which arrived late to the Spratly land-grab, was left to occupy eight fully and semi-submerged reefs. With such little land to build upon, China has been playing catch up ever since.

Over the past year, China’s Spratly outposts have been systematically undergoing a process known as “land reclamation,” where dedicated dredging vessels dig up sediment from the sea and dump it on top of submerged reefs to make islands. China has already built five islands through reclamation, and at least two additional islands are in the early stages of development. China is not the first claimant to reclaim land – Malaysia’s Swallow Reef and several Vietnamese islands have been artificially built or extended – but China’s reclamation efforts are operating at a larger scale than any previous project. Already, the artificial island built on Fiery Cross Reef has eclipsed Taiwan’s Taiping Island as the largest in the Spratly Chain, and buildings are under development on several other Chinese reefs. As their new military outposts become operational, it is imperative that we understand just what China is building in the South China Sea.

 

Fiery Cross Reef

Fiery Cross Reef (also known as Yongshu Island) was completely underwater until August 2014, when Chinese dredgers began to dig up the surrounding sediment. Before construction began, the Chinese presence consisted of a single concrete bunker on the reef’s southwest end, but this island has since become the largest in the Spratly chain, measuring nearly 2.3 km². The new island includes a nearly two-mile long strip of land that appears to be the future site of an airfield.

Fiery Cross Reef Feb 6th 2015
 
Fiery Cross Reef  Nov 14th 2014

Between November 2014 and January 2015, the southwest of the reef was reclaimed, connecting the airfield with the original concrete structure and enlarging the total land mass of the reef. Dredging activity has not ceased, and land is still being reclaimed. Recent photographs released by Philippine media show that foundations in development for a large scale construction project on the northeast of the island.

 

Johnson South Reef

Johnson South Reef has undergone one of the most extraordinary transformations of any Spratly feature. Photographs released by the Philippine Department of Foreign Affairs show that land reclamation began in early 2014, and new photographs indicate that reclamation is still ongoing.

Johnson South Reef

 

In early September 2014, nearly simultaneous reports released by IHS Janes and the BBC revealed the beginnings of a large construction project. It is unclear exactly when this construction began, but photographs taken in early December of 2014 clearly show a sizable building, possibly as high as ten stories, under construction on the newly developed island.

Johnson South Reef

 

The photographs taken and released by Vietnam’s Thanh Nien News agency show a number of construction sites under development, including what may be an air traffic control center. Philippine media has claimed that Johnson South Reef will one day contain an airstrip, but current photographs fail to backup this claim.The reef’s area is roughly 6 km², and the island itself is approximately .16 km², which leaves ample room for further reclamation.

 

Cuarteron Reef

Cuarteron Reef is both China’s southernmost and westernmost outpost in the Spratly chain. Land reclamation on the reef appears to have started in March 2014. As of January 2015, China has built between .3 and .4 km² of new land. The newly built island is home to a seawall, a small military outpost, a helicopter pad, an artificial harbor, and a dock. Satellite photographs show ongoing construction projects, however photographs are not clear enough to make out what is being built.

Cuarteron Reef

 

 

Gaven Reefs

The Gaven Reefs are home to a mid-scale land reclamation project that has produced an artificial island approximately .08 km². Between June and August 2014, this island expanded from one small outpost into the buttressed island that exists today. Photos show that the new island contains barracks for construction workers and military personnel, shipping containers used as temporary shelters, an artificial harbor, and anti-aircraft weaponry. A report from IHS Janes indicates that this island contains both radar equipment and anti-ship missiles.

Gaven Reef

 

 

Hughes Reef

Land reclamation on Hughes Reef appears to have begun in March 2014. Satellite photographs suggest that construction is ongoing on the newly built island. Reports indicate that the new island is home to a lighthouse and a military outpost.

Hughes Reef

 

 

Subi Reef

Subi Reef, China’s northernmost outpost in the South China Sea, is the most recent subject of land reclamation. Satellite photographs from early February, 2015 show a significant presence of dredgers working two separate points on the southeast and the southwest of the reef. Dredging at Subi Reef first appeared in satellite photographs taken on January 26, 2015, which showed that two dredging ships had begun work on Subi Reef’s southwest end. Prior to the start of land reclamation, Subi reef contained a helicopter pad and a small concrete outpost used to house visiting troops.

Subi Reef Feb 8th 2015

 

Subi Reef  Jan 26th 2015

 

 

Mischief Reef

Mischief Reef is China’s easternmost outpost in the Spratly chain. Satellite photographs from the end of January indicate that land reclamation has just begun. These photographs show a presence of dredging vessels on the southern end of the island, as well as the addition of new land separate from an existing concrete structure. Mischief Reef is less than 200 miles from the Philippine island of Palawan (less than 150 miles from some points), thus putting the reef well within the Philippines’ Exclusive Economic Zone. Predictably, the start of reclamation at Mischief Reef has been met with significant protest from the Philippines.

Mischief Reef  Jan 26th 2015

 

Mischief Reef  Jan 26th 2015

 

 

Eldad Reef

Eldad Reef is home to a naturally occurring teardrop-shaped sandbar on its north end. The sandbar’s size and shape remained consistent in photographs taken between January 2012 and November 2013. More recent photographs, show a slight increase in size of the sandbar, indicating that there may be a low-level reclamation project underway on Eldad reef. These photographs fail to capture dredging vessels and may simply be showing naturally occurring changes, however Philippine intelligence and media claim that Eldad Reef is in fact a current target of Chinese land reclamation. The situation on Eldad is ambiguous, and we should continue to watch the reef for signs of reclamation.

Eldad Reef

 

Based on satellite photographs and intelligence reports, it is clear that China is currently reclaiming land on at least seven of its eight reefs — Fiery Cross, Johnson South, Gaven, Hughes, Cuarteron, Subi, and Mischief — and that reclamation may have also begun on Eldad Reef. Reclamation on Johnson South, Gaven, Hughes, and Cuarteron Reefs started in early 2014, reclamation of Fiery Cross Reef began in August 2014, and reclamation on Subi and Mischief Reefs started in late January 2015. Land reclamation on Eldad reef may have started in December 2014.

*  *  *

Photographs indicate that massive construction projects are underway on the newly build islands at Fiery Cross and Johnson South Reefs, while less extensive but still serious construction is ondoing at Hughes, Gaven, and Cuarteron Reefs. Given the extent to which future control over the shipping lanes of the South China Sea will impact the global balance of power, China’s island construction is worthy of our attention.

Title: Re: Official Chinese Toast Thread
Post by: Palloy on February 24, 2015, 04:27:26 PM
It's one thing to CLAIM a tiny island (and its offshore waters), but it's another to be able to defend it and keep the flag flying.  In the end these will all have docks and airstrips/helipads, aerial defense weapons and garrisons.  It's hardly "massive construction projects" by Chinese standards.

And of course it's perfectly OK when the US does it:
Title: Re: Official Chinese Toast Thread
Post by: RE on March 05, 2015, 11:35:37 PM
Renminby will be the New World Currency according to Simon Black.  ::)

Perhaps, but it will be a world currency that buys nothing.

The Chinese are TOAST.

RE

Liquidity evaporates in China as 'fiscal cliff' nears

Unless China changes course, it is set to tighten fiscal policy by 5.5pc of GDP this year, five times Britain's austerity dose annually since the Lehman crisis

     
592
     
344
     
5
     
69
     
1K
 
Email
 
A clerk counts Chinese currency notes at a bank branch in Huaibei in central China's Anhui province
The International Monetary Fund says China's budget deficit topped 10pc of GDP in 2014 Photo: AP
 

Nobody can fault China's leaders for lack of bravery. The Politburo has kept its nerve as the world's most giddy experiment in credit-driven growth faces assault on three major fronts at once.

Real interest rates have rocketed. The trade-weighted rise in the yuan over the past two years has been spectacular. Fiscal policy is about to tighten drastically as the authorities clamp down on big-spending local governments.

Put together, China is pursuing the most contractionary mix of economic policies in the G20, relative to the status quo ante. Collateral damage is already visible in the sliding global prices of iron ore, copper, nickel, lead and zinc over recent months, as well as thermal coal, oil, corn and even sugar.

Zhiwei Zhang, from Deutsche Bank, says China faces a "fiscal cliff" this year as Beijing attempts to rein in spending. "This year, China will likely face the worst fiscal challenge since 1981. This is not well recognised in the market," he said.

The International Monetary Fund says China's budget deficit topped 10pc of GDP in 2014 if measured properly, including borrowing by the regions through "financing vehicles" as well as land sales - a patently unsustainable form of funding that makes up 35pc of local government revenue. This is the highest deficit of any major country in the world, and far above safe levels.

A budget squeeze is already emerging as the property slump drags on. Zhiwei Zhang says land revenues fell 21pc in the fourth quarter of last year. "The decline of fiscal revenue is the top risk in China and will lead to a sharp slowdown," he said.

China's Development Research Centre (DRC) - the brain trust of premier Li Keqiang - has issued a new report on the bankruptcy of California's Orange County in 1994. "It is a warning to China that the country needs to improve its tax system," said the paper.

Interestingly, the DRC has also published a report recently on the decline in China's electrical, mechanical and car industries, a finding that might surprise some in the West.

The Chinese tax system is highly leveraged to the property cycle, like Ireland's before the boom broke in 2007. The scale is epic. A study by the US Federal Reserve found that property investment in China has risen from 4pc to 15pc of GDP since 1998. This is even higher than in Japan in the blow-off years of the late 1980s.

The denouement is well under way. Home prices fell 3.1pc in January from a year earlier. Average sales have dropped 7pc from a year ago in the large Tier 1 cities, 22pc for Tier 2 and 15pc for the Tier 3 towns.

The inventory overhang has risen to 18 months, three times US levels. New floor space has dropped 30pc on a three-month moving average.

China is not the only country in Asia facing a hangover. Nomura's Rob Subbaraman says housing booms in India, Hong Kong and Taiwan all match or exceed the US bubble in 2008, with Malaysia not far behind. "Asia is setting itself up for a major credit crunch," he said.

Nomura warned that markets are relying too much on a "China policy put", betting that Beijing will always come to the rescue with more stimulus if need be. "We believe there is creeping investor complacency. We assign a one-in-three chance of a hard landing – growth averaging 5pc or less over four quarters – starting within the next two years."

Premier Li appears determined to grasp the nettle, openly acknowledging that China has exhausted the low-hanging fruit of catch-up growth and reached the safe limits of credit expansion. He praised a report concluding that China will remain stuck in the "middle income trap" without a top-to-bottom overhaul of the economic system.

New regulations came into force in January that prohibit local governments from raising money off-books. If enforced fully, this will tighten fiscal policy by 5.5pc of GDP this year, roughly five times the dose in austerity in the UK each year since the Lehman crisis. That is the sort of fiscal contraction imposed on Greece.

This would risk a depression. "They will have to find some way to manouvre around this, because they can't let it happen. But there are certainly risks," said Mark Williams, from Capital Economics.

China cannot easily crank up monetary stimulus to cushion the fiscal shock because the "efficiency" of credit has collapsed. The economy is saturated. Extra growth generated by each extra yuan of loans has dropped from a ratio of 0.8 to 0.2 since 2008.

"Most new lending at present goes to roll over existing debt," said Diana Choyleva, from Lombard Street Research. "The appetite for ‘genuine’ credit is muted. Flooding the banks with liquidity may help relieve interbank stress, but it’s not going to feed straight into real activity."

Total credit has already risen from 100pc to 250pc of GDP in eight years to $26 trillion, equal to the US and Japanese banking systems combined. Li Keqiang has clearly concluded that any further leverage compounds the danger for little useful effect.

The People's Bank of China (PBOC) cut the seven-day interest rate to 5.5pc on Wednesday from 7pc, the latest in a blizzard of rate cuts. This is not monetary stimulus, or a signal that China is about to flood the world with fresh liquidity, whatever the appearances.

Wang Tao, an economist at UBS, says the benchmark one-year borrowing cost for Chinese companies has jumped by 800 basis points in real terms since 2011 as inflation collapses. Business profits fell 9pc in the fourth quarter of last year. The latest cuts merely "mitigate massive tightening" already under way. "With industrial profit growth already mired in recession, risks are quickly building up in financial system," she said.

China is uncomfortably close to a deflationary trap. Factory gate prices fell 4.3pc in January, a sign of excess capacity across the economy. The PBOC admitted on Wednesday for the first time that it is probing the deflation threat.

Global markets greeted the recent cuts in lending rates and the Reserve Requirement Ratio (RRR) as evidence that China is turning on the spigot once again. This is a misunderstanding. The RRR cut adds no net stimulus. It offsets monetary tightening that occurs automatically as the central bank dips into the country's €3.8 trillion foreign reserves to shore up the currency.

China is no longer buying US Treasuries and global bonds. It has become a net seller, stepping in to offset accelerating outflows of capital. The capital deficit reached a record $91bn in the fourth quarter.

The PBOC is now in the mirror position of boom years when it was buying foreign assets at a vertiginous pace, causing liquidity inside China to surge. All of a sudden that liquidity is draining away.

There is another twist to this. The PBOC's reserve body, SAFE, was still buying $30bn a month of global bonds a year ago. It is now selling an estimated $10bn a month. This a $40bn a month shift in central bank intervention in the asset markets, a lot more than the extra $15bn a month that the Bank of Japan has been buying since October.

Or put another way, Asia is "tapering" at a pace of $25bn a month. You could argue that this neutralises half the quantitative easing soon to come from the European Central Bank.

A country in China's predicament normally needs a devaluation, yet China has fixed the yuan - through a "dirty float" - to a soaring US dollar. The yuan has risen 60pc against the Japanese yen and 90pc against Brazil's real since mid-2012. It has risen 27pc against the euro over the past year alone, and 110pc against the Russian rouble.

Mrs Choyleva says China's true growth rate fell to 4.4pc last year, and to just 1.7pc in the fourth quarter. "Beijing needs to support growth and its only viable option is a weaker yuan," she said.

The obvious danger for the world is China may be forced to defend itself as monetary disorder spreads and half the big central banks resort to currency combat. Such a fateful decision would send a deflationary impulse through a global system that has already used up its monetary ammunition and no longer has shock absorbers. China's excess capacity - made worse by $5 trillion of fixed investment in 2014 - would land with a thud in Europe and America.

For now the PBOC insists that the yuan will "remain very stable". We will find out soon enough whether this means stable against the dollar, or the euro, or the yen.

Title: Re: Official Chinese Toast Thread
Post by: RE on March 13, 2015, 07:14:22 PM
Now even the WSJ is calling China Toast.

RE

The Coming Chinese Crackup (http://www.zerohedge.com/news/2015-03-13/coming-chinese-crackup)

Submitted by Tyler Durden on 03/13/2015 21:50 -0400

    China
    Corruption
    Eastern Europe
    fixed
    None
    North Korea
    Transparency
    Ukraine
    Wall Street Journal

Authored by David Shambaugh, originally posted at The Wall Street Journal,

On Thursday, the National People’s Congress convened in Beijing in what has become a familiar annual ritual. Some 3,000 “elected” delegates from all over the country—ranging from colorfully clad ethnic minorities to urbane billionaires—will meet for a week to discuss the state of the nation and to engage in the pretense of political participation.

Some see this impressive gathering as a sign of the strength of the Chinese political system—but it masks serious weaknesses. Chinese politics has always had a theatrical veneer, with staged events like the congress intended to project the power and stability of the Chinese Communist Party, or CCP. Officials and citizens alike know that they are supposed to conform to these rituals, participating cheerfully and parroting back official slogans. This behavior is known in Chinese as biaotai, “declaring where one stands,” but it is little more than an act of symbolic compliance.

Despite appearances, China’s political system is badly broken, and nobody knows it better than the Communist Party itself. China’s strongman leader, Xi Jinping, is hoping that a crackdown on dissent and corruption will shore up the party’s rule. He is determined to avoid becoming the Mikhail Gorbachev of China, presiding over the party’s collapse. But instead of being the antithesis of Mr. Gorbachev, Mr. Xi may well wind up having the same effect. His despotism is severely stressing China’s system and society—and bringing it closer to a breaking point.

Predicting the demise of authoritarian regimes is a risky business. Few Western experts forecast the collapse of the Soviet Union before it occurred in 1991; the CIA missed it entirely. The downfall of Eastern Europe’s communist states two years earlier was similarly scorned as the wishful thinking of anticommunists—until it happened. The post-Soviet “color revolutions” in Georgia, Ukraine and Kyrgyzstan from 2003 to 2005, as well as the 2011 Arab Spring uprisings, all burst forth unanticipated,

China-watchers have been on high alert for telltale signs of regime decay and decline ever since the regime’s near-death experience in Tiananmen Square in 1989. Since then, several seasoned Sinologists have risked their professional reputations by asserting that the collapse of CCP rule was inevitable. Others were more cautious—myself included. But times change in China, and so must our analyses.

The endgame of Chinese communist rule has now begun, I believe, and it has progressed further than many think. We don’t know what the pathway from now until the end will look like, of course. It will probably be highly unstable and unsettled. But until the system begins to unravel in some obvious way, those inside of it will play along—thus contributing to the facade of stability.

Communist rule in China is unlikely to end quietly. A single event is unlikely to trigger a peaceful implosion of the regime. Its demise is likely to be protracted, messy and violent. I wouldn’t rule out the possibility that Mr. Xi will be deposed in a power struggle or coup d’état. With his aggressive anticorruption campaign—a focus of this week’s National People’s Congress—he is overplaying a weak hand and deeply aggravating key party, state, military and commercial constituencies.

The Chinese have a proverb, waiying, neiruan—hard on the outside, soft on the inside. Mr. Xi is a genuinely tough ruler. He exudes conviction and personal confidence. But this hard personality belies a party and political system that is extremely fragile on the inside.

Consider five telling indications of the regime’s vulnerability and the party’s systemic weaknesses.

    First, China’s economic elites have one foot out the door, and they are ready to flee en masse if the system really begins to crumble. In 2014, Shanghai’s Hurun Research Institute, which studies China’s wealthy, found that 64% of the “high net worth individuals” whom it polled—393 millionaires and billionaires—were either emigrating or planning to do so. Rich Chinese are sending their children to study abroad in record numbers (in itself, an indictment of the quality of the Chinese higher-education system).

     

    Just this week, the Journal reported, federal agents searched several Southern California locations that U.S. authorities allege are linked to “multimillion-dollar birth-tourism businesses that enabled thousands of Chinese women to travel here and return home with infants born as U.S. citizens.” Wealthy Chinese are also buying property abroad at record levels and prices, and they are parking their financial assets overseas, often in well-shielded tax havens and shell companies.

     

    Meanwhile, Beijing is trying to extradite back to China a large number of alleged financial fugitives living abroad. When a country’s elites—many of them party members—flee in such large numbers, it is a telling sign of lack of confidence in the regime and the country’s future.

     

    Second, since taking office in 2012, Mr. Xi has greatly intensified the political repression that has blanketed China since 2009. The targets include the press, social media, film, arts and literature, religious groups, the Internet, intellectuals, Tibetans and Uighurs, dissidents, lawyers, NGOs, university students and textbooks. The Central Committee sent a draconian order known as Document No. 9 down through the party hierarchy in 2013, ordering all units to ferret out any seeming endorsement of the West’s “universal values”—including constitutional democracy, civil society, a free press and neoliberal economics.

     

    A more secure and confident government would not institute such a severe crackdown. It is a symptom of the party leadership’s deep anxiety and insecurity.

     

    Third, even many regime loyalists are just going through the motions. It is hard to miss the theater of false pretense that has permeated the Chinese body politic for the past few years. Last summer, I was one of a handful of foreigners (and the only American) who attended a conference about the “China Dream,” Mr. Xi’s signature concept, at a party-affiliated think tank in Beijing. We sat through two days of mind-numbing, nonstop presentations by two dozen party scholars—but their faces were frozen, their body language was wooden, and their boredom was palpable. They feigned compliance with the party and their leader’s latest mantra. But it was evident that the propaganda had lost its power, and the emperor had no clothes.

     

    In December, I was back in Beijing for a conference at the Central Party School, the party’s highest institution of doctrinal instruction, and once again, the country’s top officials and foreign policy experts recited their stock slogans verbatim. During lunch one day, I went to the campus bookstore—always an important stop so that I can update myself on what China’s leading cadres are being taught. Tomes on the store’s shelves ranged from Lenin’s “Selected Works” to Condoleezza Rice’s memoirs, and a table at the entrance was piled high with copies of a pamphlet by Mr. Xi on his campaign to promote the “mass line”—that is, the party’s connection to the masses. “How is this selling?” I asked the clerk. “Oh, it’s not,” she replied. “We give it away.” The size of the stack suggested it was hardly a hot item.

     

    Fourth, the corruption that riddles the party-state and the military also pervades Chinese society as a whole. Mr. Xi’s anticorruption campaign is more sustained and severe than any previous one, but no campaign can eliminate the problem. It is stubbornly rooted in the single-party system, patron-client networks, an economy utterly lacking in transparency, a state-controlled media and the absence of the rule of law.

     

    Moreover, Mr. Xi’s campaign is turning out to be at least as much a selective purge as an antigraft campaign. Many of its targets to date have been political clients and allies of former Chinese leader Jiang Zemin. Now 88, Mr. Jiang is still the godfather figure of Chinese politics. Going after Mr. Jiang’s patronage network while he is still alive is highly risky for Mr. Xi, particularly since Mr. Xi doesn’t seem to have brought along his own coterie of loyal clients to promote into positions of power. Another problem: Mr. Xi, a child of China’s first-generation revolutionary elites, is one of the party’s “princelings,” and his political ties largely extend to other princelings. This silver-spoon generation is widely reviled in Chinese society at large.

     

    Finally, China’s economy—for all the Western views of it as an unstoppable juggernaut—is stuck in a series of systemic traps from which there is no easy exit. In November 2013, Mr. Xi presided over the party’s Third Plenum, which unveiled a huge package of proposed economic reforms, but so far, they are sputtering on the launchpad. Yes, consumer spending has been rising, red tape has been reduced, and some fiscal reforms have been introduced, but overall, Mr. Xi’s ambitious goals have been stillborn. The reform package challenges powerful, deeply entrenched interest groups—such as state-owned enterprises and local party cadres—and they are plainly blocking its implementation.

These five increasingly evident cracks in the regime’s control can be fixed only through political reform. Until and unless China relaxes its draconian political controls, it will never become an innovative society and a “knowledge economy”—a main goal of the Third Plenum reforms. The political system has become the primary impediment to China’s needed social and economic reforms. If Mr. Xi and party leaders don’t relax their grip, they may be summoning precisely the fate they hope to avoid.

In the decades since the collapse of the Soviet Union, the upper reaches of China’s leadership have been obsessed with the fall of its fellow communist giant. Hundreds of Chinese postmortem analyses have dissected the causes of the Soviet disintegration.

Mr. Xi’s real “China Dream” has been to avoid the Soviet nightmare. Just a few months into his tenure, he gave a telling internal speech ruing the Soviet Union’s demise and bemoaning Mr. Gorbachev’s betrayals, arguing that Moscow had lacked a “real man” to stand up to its reformist last leader. Mr. Xi’s wave of repression today is meant to be the opposite of Mr. Gorbachev’s perestroika and glasnost. Instead of opening up, Mr. Xi is doubling down on controls over dissenters, the economy and even rivals within the party.

But reaction and repression aren’t Mr. Xi’s only option. His predecessors, Jiang Zemin and Hu Jintao, drew very different lessons from the Soviet collapse. From 2000 to 2008, they instituted policies intended to open up the system with carefully limited political reforms.

They strengthened local party committees and experimented with voting for multicandidate party secretaries. They recruited more businesspeople and intellectuals into the party. They expanded party consultation with nonparty groups and made the Politburo’s proceedings more transparent. They improved feedback mechanisms within the party, implemented more meritocratic criteria for evaluation and promotion, and created a system of mandatory midcareer training for all 45 million state and party cadres. They enforced retirement requirements and rotated officials and military officers between job assignments every couple of years.

In effect, for a while Mr. Jiang and Mr. Hu sought to manage change, not to resist it. But Mr. Xi wants none of this. Since 2009 (when even the heretofore open-minded Mr. Hu changed course and started to clamp down), an increasingly anxious regime has rolled back every single one of these political reforms (with the exception of the cadre-training system). These reforms were masterminded by Mr. Jiang’s political acolyte and former vice president, Zeng Qinghong, who retired in 2008 and is now under suspicion in Mr. Xi’s anticorruption campaign—another symbol of Mr. Xi’s hostility to the measures that might ease the ills of a crumbling system.

Some experts think that Mr. Xi’s harsh tactics may actually presage a more open and reformist direction later in his term. I don’t buy it. This leader and regime see politics in zero-sum terms: Relaxing control, in their view, is a sure step toward the demise of the system and their own downfall. They also take the conspiratorial view that the U.S. is actively working to subvert Communist Party rule. None of this suggests that sweeping reforms are just around the corner.

We cannot predict when Chinese communism will collapse, but it is hard not to conclude that we are witnessing its final phase. The CCP is the world’s second-longest ruling regime (behind only North Korea), and no party can rule forever.

Looking ahead, China-watchers should keep their eyes on the regime’s instruments of control and on those assigned to use those instruments. Large numbers of citizens and party members alike are already voting with their feet and leaving the country or displaying their insincerity by pretending to comply with party dictates.

We should watch for the day when the regime’s propaganda agents and its internal security apparatus start becoming lax in enforcing the party’s writ—or when they begin to identify with dissidents, like the East German Stasi agent in the film “The Lives of Others” who came to sympathize with the targets of his spying. When human empathy starts to win out over ossified authority, the endgame of Chinese communism will really have begun.

Title: Re: Official Chinese Toast Thread
Post by: RE on March 23, 2015, 07:57:33 PM
Let's see Pepe spin this one positive for the Chinese.

RE

China Lands Hard: Rail Volume Plunges, PMI Tumbles Into Contraction, Employment Worst Since Lehman

Tyler Durden's picture




 

Chinese rail freight collapses 9.1% YoY; China Manufacturing PMI tumbled back to a contractionary 49.2 - lowest in 11 months; and the Employment sub-index plunged to its lowest since Lehman ... yeah but apart from that, everything is awesome. And for those excited about just how disastrous Chinese data is (and thus how huge the next stimulus unleashing will be), think again - China now sees exactly where the last trillion dollar QE went... a de minimus and unsustained blip in the economy and liquidity-fueled rampage in stocks (which is not what a corruption-crackdown politburo wants to encourage).

 

Single Whammy: CHINA JAN.-FEB. RAILWAY CARGO VOLUME FALLS 9.1% Y/Y

 

Double Whammy: China Manufacturing PMI prints 49.2 - lowest in 11 months

 

Everything is un-awesome...

 

Triple Whammy: Employment collapses...

 

*  *  *

Copper prices have continued to collapse and retraced the entire US day session jerk higher...

*  *  *

Of course, HSBC and Markit are screaming for moar QE...

 
 

“The HSBC Flash China Manufacturing PMI signalled a slight deterioration in the health of China’s manufacturing sector in March. A renewed fall in total new business contributed to a weaker expansion of output, while companies continued to trim their workforce numbers. Meanwhile, manufacturing companies continued to benefit from falling input costs, stemming from the recent global oil price decline. However, relatively muted client demand has led firms to pass on savings in a bid to boost new work, and cut their selling prices at a similarly sharp rate.”

Charts: Bloomberg

Title: Re: Official Chinese Toast Thread
Post by: Palloy on March 24, 2015, 03:41:12 PM
Certainly they're toast if they play by the rules and keep paying back all their foreign debts and keep allowing foreign investors to take their profits out of the country.  But they might not do that!

(http://funkman.org/animal/bird/blackswan.jpg)

They aren't de-dollarising for nothing.  Eventually China and Russia will be in a strong enough position (due to US/Japan/EU collapse) to unpeg the Yuan from the mighty Dollar, default all their foreign debts, nationalise their industries, reprice all commodities in Yuan (backed by gold, oil and gas) and keep at least a trading bloc with half the world's population in it. 

I don't suppose it would be pretty, but probably a lot better than being in the US.

This seems to be a taboo subject in the West - any serious analysis welcome.
Title: Re: Official Chinese Toast Thread
Post by: Ka on March 24, 2015, 05:09:34 PM

They aren't de-dollarising for nothing.  Eventually China and Russia will be in a strong enough position (due to US/Japan/EU collapse) to unpeg the Yuan from the mighty Dollar, default all their foreign debts, nationalise their industries, reprice all commodities in Yuan (backed by gold, oil and gas) and keep at least a trading bloc with half the world's population in it. 

I don't suppose it would be pretty, but probably a lot better than being in the US.

This seems to be a taboo subject in the West - any serious analysis welcome.

Why can't the US do the same thing (nationalize, default, restructure the currency), only its trading bloc just consists of the Western Hemisphere? If it does, I would think it would be better off since it only contains about a seventh of the world's population and has a lot more resources per head, and sufficient military strength to defend it, assuming it withdraws from the Eastern hemisphere.
Title: Re: Official Chinese Toast Thread
Post by: g on March 24, 2015, 09:49:26 PM

They aren't de-dollarising for nothing.  Eventually China and Russia will be in a strong enough position (due to US/Japan/EU collapse) to unpeg the Yuan from the mighty Dollar, default all their foreign debts, nationalise their industries, reprice all commodities in Yuan (backed by gold, oil and gas) and keep at least a trading bloc with half the world's population in it. 

I don't suppose it would be pretty, but probably a lot better than being in the US.

This seems to be a taboo subject in the West - any serious analysis welcome.

Why can't the US do the same thing (nationalize, default, restructure the currency), only its trading bloc just consists of the Western Hemisphere? If it does, I would think it would be better off since it only contains about a seventh of the world's population and has a lot more resources per head, and sufficient military strength to defend it, assuming it withdraws from the Eastern hemisphere.

The US is going to deafault on the debt Ka, it cannot be paid due to it's enormity. Most likely way is through inflation.

I see no point in nationalization of everything. The drones are doing quite well managing and charging for resources in the economic system and all the government need do is sit back and tax their efforts as they do now and continue with their techno war military proficiency that they excel in, as well as have a great time for themselves at our expense.

A currency restructuring likely will come only if the citizens lose faith in the current one, which is unlikely if the inflation default is the usual one we have already had, namely steady inflation. If the inflation gets out of hand they will merely issue a new to replace the old, a game South American countries play often.

That's the beauty of a fiat system, it is all make believe, based on what the masses perceive the value of their particular brand of fiat to be worth at any given time. The powers that be also control it's issuance and are quite generous in giving it to themselves.
Title: Re: Official Chinese Toast Thread
Post by: RE on March 24, 2015, 10:11:41 PM
The US is going to deafault on the debt Ka, it cannot be paid due to it's enormity. Most likely way is through inflation.

The debt can't be paid off by inflation.

In order for Da Fed to create more FRNs, the Treasury has to issue out an equivalent amount in T-Bills. That is more debt.  You can't pay off old debt with new debt, the Greek case demonstrates that quite well.

The only way to get rid of debt is for it to be written down.

What is more likely is that there will be a currency crisis and crash, followed by a collapse of Da Goobermint.  This likely comes after the Yen, Euro, Yuan and Ruble all crash.

In the aftermath of that, the Illuminati may try to issue out some new Global Currency and try to do a reboot.  However, without Energy supplies this credit will access, that currency will also be worthless.

RE
Title: Re: Official Chinese Toast Thread
Post by: g on March 25, 2015, 05:25:43 AM
The US is going to deafault on the debt Ka, it cannot be paid due to it's enormity. Most likely way is through inflation.

The debt can't be paid off by inflation.

In order for Da Fed to create more FRNs, the Treasury has to issue out an equivalent amount in T-Bills. That is more debt.  You can't pay off old debt with new debt, the Greek case demonstrates that quite well.

The only way to get rid of debt is for it to be written down.

What is more likely is that there will be a currency crisis and crash, followed by a collapse of Da Goobermint.  This likely comes after the Yen, Euro, Yuan and Ruble all crash.

In the aftermath of that, the Illuminati may try to issue out some new Global Currency and try to do a reboot.  However, without Energy supplies this credit will access, that currency will also be worthless.

RE

Quote
The debt can't be paid off by inflation.

The US has been inflating away it's debt for one hundred or so years.

Quote
You can't pay off old debt with new debt, the Greek case demonstrates that quite well.

 Greece fucked up and can no longer print it's own currency since it joined the Euro, it did quite well printing it's own color of confetti before then.
The only thing Greek demonstrates, Greece a mere pimple on the ass of the financial world country, is that the Nazi's screwed up big time with their ass hole attempt to take over Europe with a single currency scheme. The Euro is a failed con job, the work of politicians who are proven ass holes,  a fact that no one is willing to accept just yet.


Quote
What is more likely is that there will be a currency crisis and crash, followed by a collapse of Da Goobermint.  This likely comes after the Yen, Euro, Yuan and Ruble all crash.

A currency crash and inflation are synonymous, the speed of the currency crash is what denotes an inflation or hyperinflation, it usually starts as mere inflation but the speed escalates to hyperinflation.

Quote
In the aftermath of that, the Illuminati may try to issue out some new Global Currency and try to do a reboot.  However, without Energy supplies this credit will access, that currency will also be worthless.

There will always be energy and always be a method of payment as long as humans inhabit the earth.





Title: Re: Official Chinese Toast Thread
Post by: RE on March 25, 2015, 05:37:41 AM
The US is going to deafault on the debt Ka, it cannot be paid due to it's enormity. Most likely way is through inflation.

The debt can't be paid off by inflation.

In order for Da Fed to create more FRNs, the Treasury has to issue out an equivalent amount in T-Bills. That is more debt.  You can't pay off old debt with new debt, the Greek case demonstrates that quite well.

The only way to get rid of debt is for it to be written down.

What is more likely is that there will be a currency crisis and crash, followed by a collapse of Da Goobermint.  This likely comes after the Yen, Euro, Yuan and Ruble all crash.

In the aftermath of that, the Illuminati may try to issue out some new Global Currency and try to do a reboot.  However, without Energy supplies this credit will access, that currency will also be worthless.

RE

Quote
The debt can't be paid off by inflation.

The US has been inflating away it's debt for one hundred or so years.

The FSoA hasn't inflated away any Debt.  That's why the total is going Exponential.


Quote
You can't pay off old debt with new debt, the Greek case demonstrates that quite well.

 Greece fucked up and can no longer print it's own currency since it joined the Euro, it did quite well printing it's own color of confetti before then.
The only thing Greek demonstrates, Greece a mere pimple on the ass of the financial world country, is that the Nazi's screwed up big time with their ass hole attempt to take over Europe with a single currency scheme. The Euro is a failed con job, the work of politicians who are proven ass holes,  a fact that no one is willing to accept just yet.


The Greeks did quite poorly with the Drachma before they signed on to the Euro.  Back in the day, you could buy a bottle of Ouzo for Chump change in Dollars.  The Euro got them Industrial Bennies of Oil Purchasing power they did not have with the Drachma.

Quote
What is more likely is that there will be a currency crisis and crash, followed by a collapse of Da Goobermint.  This likely comes after the Yen, Euro, Yuan and Ruble all crash.

A currency crash and inflation are synonymous, the speed of the currency crash is what denotes an inflation or hyperinflation, it usually starts as mere inflation but the speed escalates to hyperinflation.

Quote
In the aftermath of that, the Illuminati may try to issue out some new Global Currency and try to do a reboot.  However, without Energy supplies this credit will access, that currency will also be worthless.

There will always be energy and always be a method of payment as long as humans inhabit the earth.

There will always be Energy as long as the Sun Shines, but the amount which is recoverable and can be "sold" is vanishingly small compared to the amount of energy contained in Fossil fuels.  It is unlikely that any global monetary system can be created to deal with a planet in energy deficit relative to the total population size.  The outcome here is a collapse of all monetary systems until the die off is sufficient to bring Homo Sap back into balance with the total energy available that can be collected on a Pay As You Go basis.
Title: Re: Official Chinese Toast Thread
Post by: g on March 25, 2015, 05:57:37 AM
RE, Will have to have continue this one at a later date.

That dreaded time is here for me, the tax man. Completing my days of arduous labor on such at present and have to make the CPA's office at 2 PM. Will most likely be MIA for a few days. Be a good boy while I'm gone, and remember I'll most likely drop in to lurk for a while so remember GO is always watching and listening  .  :exp-grin: :exp-grin:

                                   
Famous Diner GO T Shirt Souvenirs on sale DD gift shop
Famous Diner GO T Shirt Souvenirs on sale DD gift shop
   :exp-laugh:
 

Title: Re: Official Chinese Toast Thread
Post by: RE on March 25, 2015, 06:03:09 AM
RE, Will have to have continue this one at a later date.

That dreaded time is here for me, the tax man.

Good luck with the Taxes GO!  I got mine and SUN's DONE!  Big relief.

We'll be here if the Internet is still running when you get done with it.

RE
Title: Re: Official Chinese Toast Thread
Post by: RE on March 26, 2015, 06:12:02 PM
New Chinese Bubble waiting to POP!

Gotta love that graph for the Shanghai Composite Index.  Nearly DOUBLES in under a year!

Seriously folks, the companies in that index are worth 2X as much today as they were last year?  While just about the whole world is stagnant at best and in recession in many places?

Meanwhile, they're buying all this stock leveraged up to beat the band.  What could go wrong?

RE

China's Stock Bubble Leaves BNP Speechless: "What Happens Next Is An Unknown-Unknown"

Tyler Durden's picture



 

Earlier this month, we identified the reason why Chinese stocks have continued to rise in the face of overwhelming evidence that the country’s economy is decelerating quickly. While the first part of the 8-month run can be plausibly attributed to PSL, the furious buying that began in late November looks to be at least partly attributable to the fact that thanks to tighter regulations on lending outside the traditional banking system, China’s $2 trillion shadow banking complex needed somewhere to put cash to work and that somewhere turns out to be the giant bubble that is the SHCOMP. Here’s more: 

 
 

Because according to Reuters, it is precisely China's trust firms, with total assets of $2.2 trillion, and who together with Banker Acceptances comprise the bulk of China's shadow banking pipeline, and no longer able (or willing) to lend to China's small companies and individuals due to a spike in regulation, are shifting more cash into frothy capital markets and over-the-counter (OTC) instruments instead of loans.

 

In other words, instead of using their vast cash hoard of over $2 trillion to re-lend and stimulate China's economy, China's unregulated, shadow banking conduits are now directly buying stocks!

Shortly thereafter we highlighted the 7 main reasons for the Chinese stock ramp all of which boil down to one thing: liquidity. Here they are, courtesy of UBS:

 
 

With no significant change in China's macro or corporate fundamentals, the visible rebound in China's A-share market since November appears to have been largely liquidity driven. We think this, in turn, may have been fuelled by a number of factors including:


1. new funds flowing into the stock market from household saving, real estate, commodities and trust markets;


2. banks' bridge loans provided to investors who lost access to other high-yield shadow banking products as the result of tighter regulation;


3. the PBC's easing of liquidity conditions via a variety of "targeted easing" tools (e.g. MSL, PSL, etc.);


4. the official launch of Mutual Market Access (MMA) between the Hong Kong and Shanghai exchanges;


5. long-term expectations for SOE reform and A-shares entering the MSCI index next June;


6. increased use of leverage by retail investors via margin trading; and

 

7. market sentiment being boosted by expectations for further policy easing.

Meanwhile, February’s RRR cut failed to meaningfully lower China’s interbank rates, likely due to continued sizable capital outflows and significant liquidity withdrawals from China’s money markets by recent IPO applications.

Meanwhile, China’s securities regulator warned investors that not wanting to miss out on the next leg up is not a good investment strategy to follow, especially in a market as frothy as this one. Now, BNP is out with a note calling China’s equity bubble “a microcosm for the overall economy: unsustainable growth in leverage masking ever-deteriorating fundamentals and increasing future downside risks.” Here’s more: 

 
 

Against all odds, the best performing asset class on the planet over the last nine months or so has been Chinese equities…

...it’s not the economy (as we’ve been saying for months)...

 
 

What underlies these extraordinary gains? It is certainly not economic fundamentals. Led by the accelerating real estate slump (China: It’s Only Just Begun), China’s GDP growth has steadily slowed with reported 2014 GDP growth of 7.4% the slowest in almost twenty years. A range of ‘hard’ economic indicators such as electricity production and rail cargo volumes suggest even slower growth. Our preferred ‘real, real’ GDP estimate flags that output growth could have been as low as c.4½% in 2014 (China: Fit as a Fiddle). While the usual data fog around the Lunar New Year partially clouds analysis, high frequency indicators that generate early estimates of GDP growth suggest that the growth has continued to slide in 2015Q1…

...it must be liquidity….

 
 

By definition therefore equities’ stellar performance has been a function of liquidity driven multiple expansion. The P/E ratios for the Shanghai and Shenzhen markets have roughly doubled since August to c.19x and c.44x respectively. While still a long way short of the incredible highs of 70-80x reached during the 2006-2007 bubble, multiples are now rapidly approaching their post-GFC highs. One obvious source of fresh liquidity which could have powered equities’ bull-run is from the long-delayed introduction of the Hong KongShanghai ‘stock connect’ last November. The scheme, formerly known as ‘the through train’, allows two trading between the Shanghai A-share market and the Hang Seng. Two-way flows however have been relatively meagre. An initial aggregate quota of RMB300bn was set for northbound flows into Shanghai. So far only about a cumulative RMB125bn has flowed north, leaving RMB175bn of the aggregate quota unfilled. And northbound buy orders have in turn typically only accounted for around ¾% of the Shanghai market’s daily turnover…

...and it comes from a predictable place, leverage…

 
 

Far from a surge in external liquidity, an increasingly self-feeding domestic frenzy fuelled by leverage appears to be the key driver….Margin purchases have been running well ahead of redemptions ensuring that the outstanding stock of margin debt has ballooned by over RMB1 trillion since August; equivalent to more than 1% of GDP…

...and castles built on quicksand (i.e. margin debt) will likely collapse…

 
 

Margin purchases are now accounting for almost 20% of equities daily turnover which itself has soared to wholly unprecedented levels in another sign of self-feeding speculative frenzy. What happens next is clearly an ‘unknown-unknown’. By definition detached from fundamentals, speculative bubbles are inherently re-enforcing in the short-term and frequently last longer than expected. The longer they continue, however, the larger the eventual bursting. 

 

*  *  *

As a reminder: 

Title: Re: Official Chinese Toast Thread
Post by: agelbert on April 20, 2015, 03:03:00 PM
 (http://www.createaforum.com/gallery/renewablerevolution/3-200415175719.png)
Title: New Silk Road Could Change Global Economics Forever
Post by: RE on May 23, 2015, 06:49:31 PM
More Silk Road nonsense.

RE

New Silk Road Could Change Global Economics Forever (http://oilprice.com/Energy/Energy-General/New-Silk-Road-Could-Change-Global-Economics-Forever.html)

By Robert Berke
Posted on Thu, 21 May 2015 20:58 | 4

 Part 1: The New Silk Road

Beginning with the marvelous tales of Marco Polo’s travels across Eurasia to China, the Silk Road has never ceased to entrance the world. Now, the ancient cities of Samarkand, Baku, Tashkent, and Bukhara are once again firing the world’s imagination.

China is building the world’s greatest economic development and construction project ever undertaken: The New Silk Road. The project aims at no less than a revolutionary change in the economic map of the world. It is also seen by many as the first shot in a battle between east and west for dominance in Eurasia.

The ambitious vision is to resurrect the ancient Silk Road as a modern transit, trade, and economic corridor that runs from Shanghai to Berlin. The 'Road' will traverse China, Mongolia, Russia, Belarus, Poland, and Germany, extending more than 8,000 miles, creating an economic zone that extends over one third the circumference of the earth.

Related: This Innovation Will Help U.S. Companies Win The Oil Price War

The plan envisions building high-speed railroads, roads and highways, energy transmission and distributions networks, and fiber optic networks. Cities and ports along the route will be targeted for economic development.

An equally essential part of the plan is a sea-based “Maritime Silk Road” (MSR) component, as ambitious as its land-based project, linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and the Indian Ocean.

When completed, like the ancient Silk Road, it will connect three continents: Asia, Europe, and Africa. The chain of infrastructure projects will create the world's largest economic corridor, covering a population of 4.4 billion and an economic output of $21 trillion.

Politics and Finance:

The idea for reviving the New Silk Road was first announced in 2013 by the Chinese President, Xi Jinping. As part of the financing of the plan, in 2014, the Chinese leader also announced the launch of an Asian International Infrastructure Bank (AIIB), providing seed funding for the project, with an initial Chinese contribution of $47 billion.

China has invited the international community of nations to take a major role as bank charter members and partners in the project. Members will be expected to contribute, with additional funding by international funds, including the World Bank, investments from private and public companies, and local governments.

Some 58 nations have signed on to become charter bank members, including most of Western Europe, along with many Silk Road and Asian countries. There are 12 NATO countries among AIIB´s founding member states (UK, France, Netherlands, Germany, Italy, Luxembourg, Denmark, Iceland, Spain, Portugal, Poland and Norway), along with three of the main US military allies in Asia (Australia, S. Korea and New Zealand).

After failed attempts by the US to persuade allies against joining the bank, the US reversed course, and now says that it has always supported the project, a disingenuous position considering the fact that US opposition was hardly a secret. The Wall Street Journal reported in November 2014 that “the U.S. has also lobbied hard against Chinese plans for a new infrastructure development bank…including during teleconferences of the Group of Seven major industrial powers.

The Huffington Post’s Alastair Crooke had this to say on the matter: “For very different motives, the key pillars of the region (Iran, Turkey, Egypt and Pakistan) are re-orienting eastwards. It is not fully appreciated in the West how important China's "Belt and Road" initiative is to this move (and Russia, of course is fully integrated into the project). Regional states can see that China is very serious indeed about creating huge infrastructure projects from Asia to Europe. They can also see what occurred with the Asia Infrastructure Investment Bank (AIIB), as the world piled in (to America's very evident dismay). These states intend to be a part of it.”

Related: Big Oil May Be Caught Off-Guard By Wave Of Retirement

Buttressing this effort, China plans on injecting at least $62 billion into three banks to support the New Silk Road. The China Development Bank (CDB) will receive $32 billion, the Export Import Bank of China (EXIM) will take on $30 billion, and the Chinese government will also pump additional capital into the Agricultural Development Bank of China (ADBC).

The US: Unlikely Partner on the Silk Road:

Will the US join the effort? If the new Trans-Pacific Partnership (that pointedly leaves out both Russia and China, two Pacific powers) is any indication, US participation seems unlikely and opposition all but certain.

But there's no good reason that America should sacrifice its own leadership role in the region to China. A project as vast and complicated as the Silk Road will need US technology, experience, and resources to lower risk, removing political barriers for other allied countries like Japan to join in, while maintaining US influence in Eurasia. The Silk Road could enhance US objectives, and US support could improve the outcome of the project.

An editorial in the Wall St. Journal argues that the US proposed trade agreement and China's sponsored Silk Road project are complimentary, with the trade agreement aimed at writing rules for international trade, while the Chinese aim at developing infrastructure is necessary for increased trade.

Initial Project:

A look at the first project, currently under development, provides a good example of how China plans to proceed.

The first major economic development project will take place in Pakistan, where the Chinese have been working for years, building and financing a strategic deepwater port at Gwadar, on the Arabian Sea, that will be managed by China as the long-term leaseholder.

Gwadar will become the launching point for the much delayed Iran-Pakistan natural gas pipeline, which will ultimately be extended to China, with the Persian section already built and the Pakistan-Chinese section largely financed and constructed by the Chinese.

The pipeline is also set to traverse the country, following the Karakoram Mountain Highway towards Tibet, and cross the Chinese western border to Xinjang. The highway will also be widened and modernized, and a railroad built, connecting the highway to Gwadar.
The Most Compelling Energy Opportunity Of 2015

George Soros, Morgan Stanley and other top money managers are making big bets on the coming Argentinian shale boom. With similar geology to the US and much larger deposits oil majors and investors are all looking to Argentina.

Click here to find out one of the best ways to play the coming boom

Originally, the plan was to extend the pipeline to India, with Qatar joining Iran as natural gas suppliers, forging what some considered a “peace pipeline” between India and Pakistan, but India withdrew, under pressure from the US along with its own concerns over having its energy supplies dependent upon its adversary, Pakistan.

India's Counter:

Not surprisingly, India, a US ally, countered China's initiative with one of its own, announcing a new agreement to build a port in Iran on the Arabian Sea, only a few hundred miles from Gwadar, bringing Iranian energy to India via Afghanistan, bypassing Pakistan.

Although it would offer an alternative to the Chinese-backed Gwadar initiative, the US warned India not to move ahead with the port project before a final nuclear agreement between Iran and the West is actually signed.

Related: America’s Shadowy Energy Partnership With Azerbaijan

Both the Chinese and Indian projects are clearly in defiance of international sanctions on Iran, but both countries appear unconcerned. The Chinese could also be accused of a ‘double dip’ sanctions violation, given the immense and continuing trade deals it negotiated with Russia.

The rest of the business world is sure to follow, or risk losing out in what is certain to be a new “gold rush” towards Asia in a world still struggling with the lingering effects of the great recession. And New Delhi pointed out the harsh truth: American energy companies are also trying to negotiate deals with Iran. Following on the heels of the US visit, the German mission is due in Tehran soon, with the French beating everyone to the punch in an earlier visit.

What then of sanctions? Sanctions only work in a world united behind them. If a large part of the world chooses to ignore sanctions, they become unenforceable.

Conclusions:

China and much of the world is intent on developing the largest economic development project in history, one that could have dramatic ripple effects throughout the world economy.

The project is expected to take decades, with costs running into the hundreds of billions of dollars, if not trillions. What that will mean for the world economy and trade is almost inconceivable. Is it any wonder then, that the world’s largest hedge funds, like Goldman Sachs and Blackstone, are rushing to market new multi-billion dollar international infrastructure investment funds?

No doubt a project as large and complex as this is likely to have failures, and is certain to face many western geopolitical obstructions. Assuredly, the “great game” will continue. Look no further than US President Barack Obama, who also senses the urgency. “If we don’t write the rules, China will write the rules out in that region,” he said in defense of the Trans-Pacific Partnership.

In a world where economic growth is tepid, with Europe still struggling with the aftermath of the global recession, along with China's growth slowdown, where else could a project that promises so much opportunity be found?

It's a good bet that giant iron mining companies like Vale, that have seen their business fall to a thirteen-year low, are currently busy figuring how much steel goes into construction of a new, high speed 8,000 mile railroad. If the project is successful, it could very well spark a boom across the entire depressed international mining, commodities, and construction sectors.

Consider how many jobs could be created in a decades-long construction project that spans a huge region of the world. In practically every sector, the prospects are enormous for a revival of trade and commerce.

The ancient Silk Road increased trade across the known world, but the Road also offered far more than trade. One of its least anticipated benefits was the widespread exchange of knowledge, learning, discovery, and culture.

Beyond the riches of silks, spices, and jewelry, it could be argued that the most important thing that Marco Polo brought back from China was a famous nautical and world map that was the basis for one of the most famous maps published in Europe, one that helped spark the Age of Discovery. Christopher Columbus was guided by that map and was known to have a well-annotated copy of Marco Polo's travel tales with him on his voyage of discovery of a new route to India.

For the world at large, its decisions about the Road are nothing less than momentous. The massive project holds the potential for a new renaissance in commerce, industry, discovery, thought, invention, and culture that could well rival the original Silk Road. It is also becoming clearer by the day that geopolitical conflicts over the project could lead to a new cold war between East and West for dominance in Eurasia.

The outcome is far from certain.

Coming in May, Part 2: Cold War or Competition on the New Silk Road.

By Robert Berke of Oilprice.com
Title: Re: Official Chinese Toast Thread
Post by: Palloy on May 24, 2015, 02:59:59 PM
Quote
US President Barack Obama: “If we don’t write the rules, China will write the rules out in that region,” he said in defense of the Trans-Pacific Partnership.

You can't get much more blatantly fascist than that.  The TPP rules will favour multi-national corporations over sovereign laws, which is why no public discussion is allowed.
Title: Re: New Silk Road Could Change Global Economics Forever
Post by: alan2102 on May 27, 2015, 03:50:04 PM
More Silk Road nonsense.

RE

New Silk Road Could Change Global Economics Forever (http://oilprice.com/Energy/Energy-General/New-Silk-Road-Could-Change-Global-Economics-Forever.html)
By Robert Berke
Posted on Thu, 21 May 2015 20:58 | 4
Part 1: The New Silk Road

from the Berke article:
"US President Barack Obama [said] 'If we don’t write the rules, China will write the rules out in that region'"

Hahahaha!  I LOL'ed IRL!

That's right, Bunkie: China WILL write the rules. And will do so whether or not you try to do the same. You lose. Sorry.

Your comment, RE -- "More Silk Road nonsense" -- was also good for a minor chuckle. What, pray tell, is "nonsensical" about it? One of the greatest infrastructure development projects of all time, occurring right now, executed by a well-endowed and fiercely-committed Chinese leadership... where's the "nonsense"? Of course, there is none. It is a fantastic project, plain and simple, and it will change the course of history, not just in Eurasia, but everywhere. At this late date, this is clear to all intelligent observers -- Berke included.

Thanks for the Berke article, RE. Good one!

On a related note, I just wrote a reply to Ilargi's latest foolish and impotent China-bear handwringing over on TAE. Here it is, FYI:
http://www.theautomaticearth.com/2015/05/time-to-get-real-about-china/#post-21285 (http://www.theautomaticearth.com/2015/05/time-to-get-real-about-china/#post-21285)

I would like to pause here and give you the same advice I gave Ilargi. The problem you guys will face in not-many years is that the world will very likely NOT go down in flames (barring black swans), as you continually predict that it will, but instead will likely go in the opposite direction, toward growth, development, health, wealth, and longevity for billions. Bummer, huh? For neomalthusian doomers, it'll be like the bucket of water thrown at the Wicked Witch.

Well, hey, I don't make the news, I'm just reporting it. And I'm saying you need to make course adjustments in order to avoid losing credibility, eventually to the point of becoming a laughing-stock. Mark my words. Don't say I didn't warn you.

To Ilargi:
"You should start thinking now about what you’re going to do, i.e. what you’re going to write on your blog, when the world — instead of collapsing, as you have predicted so tenaciously — enters a great economic boom, skyrocketing the living standards of billions of people, and bringing about unprecedented health and well-being. I am not certain that that is going to happen, but it is a distinct possibility, verging on likelihood. I suggest that you focus more clearly on the plight of the U.S., which is unlikely to participate in any such party. The decline-and-fall narrative will resonate here, and reflect the reality here, but not elsewhere, IMO."

Words for you to consider, RE.

Cheerio!

And Long Live the New Silk Road!  :-)

Alan
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on May 27, 2015, 04:01:29 PM
Quote
US President Barack Obama: “If we don’t write the rules, China will write the rules out in that region,” he said in defense of the Trans-Pacific Partnership.

You can't get much more blatantly fascist than that.  The TPP rules will favour multi-national corporations over sovereign laws, which is why no public discussion is allowed.

It is a case of dueling fascisms, after a fashion: the U.S. kind, and the Chinese kind. The U.S. kind is more corrupt, more inherently and disastrously wasteful, more arrogant, and generally more of everything that you don't want. The Chinese kind is more forward-looking, more courageous, much more decisive and committed, and willing to place huge bets on things capable of paying off with much-more-huge, global-level wealth (scores and hundreds of $trillions, in 2015 bucks). It is clear now that they will succeed. But their system has some of the uglier fascist characteristics as well; e.g. civil liberties in China (ug!). At least we have the tattered remains of a Bill of Rights, for whatever that may be worth.
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on May 27, 2015, 04:19:41 PM

PS: 

Dateline May 2015, and... and... and no collapse (China or other) in sight! I was promised that China was going down in flames last year, and the year before, and the year before that. And every year before THAT, back to the turn of the century at least.  I am growing impatient.  I want my doom, dammit!


PSS:

for your reading pleasure:

http://nextbigfuture.com/2015/02/china-plans-to-developing-every-silk.html (http://nextbigfuture.com/2015/02/china-plans-to-developing-every-silk.html)
  2/01/2015
  China plans to develop every Silk road country and pledges using $4 trillion in reserves to drive overseas expansion of industry, nuclear and rail
  China's two domestic High Speed Rail (HSR) manufacturers, China North Railway (CNR) and China South Railway (CSR), now control the country's entire HSR market. By 2014, just six years after the launch of China's first HSR passenger service, there was 16,000 km of tracks, connecting most major cities....

http://nextbigfuture.com/2015/02/chinas-4-trillion-mercantilist-will.html (http://nextbigfuture.com/2015/02/chinas-4-trillion-mercantilist-will.html)
  2/07/2015
  China's $4 trillion Seedfunding for Global Infrastructure Buildout
  China will be leveraging its $4 trillion in reserves to provide low interest financing for high speed rail, export of Chinese nuclear reactors, factories and property development. China is offering to fill the worlds infrastructure gap. This will enable all of the developing world to follow the China economic development plan....

http://nextbigfuture.com/2015/02/china-spending-to-build-40000-miles-of.html (http://nextbigfuture.com/2015/02/china-spending-to-build-40000-miles-of.html)
  2/02/2015
  China spending to build 40,000 miles of global high speed rail compared to Obamacare or US War costs
  Thirty-eight countries and regions worldwide plan to build high-speed rail lines and work mostly with China on the construction of those high speed rail lines. A global (across Asia, Europe, middle east and Africa) high speed rail network with total length of 93,000 kilometers (58000 miles), or 8.5 times the total length of high-speed railways....
Title: "New Silk Road" Part 2: Cold War Or Competition?
Post by: RE on May 27, 2015, 05:58:07 PM
A1 The China Bull is BACK!

RE

http://www.zerohedge.com/news/2015-05-27/new-silk-road-part-2-cold-war-or-competition (http://www.zerohedge.com/news/2015-05-27/new-silk-road-part-2-cold-war-or-competition)

"New Silk Road" Part 2: Cold War Or Competition?

Tyler Durden's picture



 

Submitted by Robert Berke via OilPrice.com,

Part 2: Cold War or Competition on the New Silk Road.

Note:
In Part 1 of “The New Silk Road,” we examined the China’s plan for rebuilding the Silk Road, stretching from Europe to Asia.

In Part 2, we look at currently proposed projects, and geopolitical rivalries that could stall and hamper progress.

Silk Road Projects:

It is important to understand that the new “Road’ is not a formal plan in any sense but merely a broad outline of goals, a work in progress, being filled in, opportunistically, with projects as they are developed, and as negotiations with target countries allow. The Road is also not a 'start-up' from scratch, but builds upon and extends a number of projects that have been ongoing with China's partners.

The Iran-Pakistan-China project (described in Part 1) is one of the few that provides more details, but it is still very much in the planning stage. The second proposed project, only recently made public, focuses on Russia. China is also proposing a partnership with India for its third project.

The Pakistan program is an important economic development project that ties in with the Road as one of the connecting dots along the way, while the proposed program for Russian could become the nexus for the entire Road project, and the proposed India project could become the crucial piece in tying it all together.

Russia and China, the Emerging Partnership:

What makes Russia important enough to include in the plan? A better question might be: how is it possible to leave out Russia, the largest country in Eurasia, from a plan to build across the entire region?

In a recent meeting in Moscow, celebrating the 70th anniversary of the allied victory in World War II – which saw Indian, Chinese, and Russia troops parading in Red Square – China and Russia signed multiple agreements to tie development of the Chinese sponsored Silk Road to the Russian sponsored Eurasian Economic Union (EAEU).

The EAEU plan is a Kremlin-sponsored trade union between Russian, Kazakhstan, Kyrgyzstan, Belarus and Armenia, that has been pilloried in the western press as part of Russia’s supposed underlying agenda to re-establish the Soviet Union. With Russia’s inclusion, the plan for the Silk Road will extend from Beijing to the border of Poland. The blossoming cooperation between Russia and China is not something to be ignored, according to former Indian diplomat M.K. Bhadrakumar:

“Clearly, the cold blast of western propaganda against the EAEU failed to impress China…China’s integration with the EAEU means in effect that a real engine of growth is being hooked to the Russian project. In reality, China is the key to the future of the EAEU. Significantly, Xi has combined his visit to Moscow with a tour of Belarus and Kazakhstan, the two other founder members of the EAEU….This is vital for the implementation of the Silk Routes via Russia and Central Asia.”

The Chinese/Russian agreements cover eight specific projects, starting with the development of a high speed railway that will connect Moscow and Kazan (Tatarstan Republic), and will be extended to China, connecting the two countries via Kazakhstan. China’s Railway Group has won a contract for $390 million to build the road, with China contributing an initial $5.8 billion toward total estimated costs of $21.4 billion. Eventually, the planners hope to link this project to Russia’s planned high speed railway to Europe.

Also, China's Jilii province has offered to build a cross-border high speed railway link between the two countries connecting with Russia's major Pacific port city, Vladivostok. In addition, the two nations are expanding their energy partnership through a variety of projects. As Oilprice reported in a May 12 article, “the Russian hydropower company RusHydro and China Three Gorges Corp. have signed a deal to cooperate on a 320-megawatt hydroelectric power project in Russia’s Far East…near the border between China and Russia.” As described, this is the largest dam project in China or Russia, already under construction, and is expected to generate 1.6 trillion watts of electrical energy per year, with an estimated cost of around $400 billion.

China has also proposed developing an economic corridor between Russia, Mongolia, and China, a plan likely to include the EAEU member states, the initial step in development of one of the major components of the Silk Road, the Eurasia Economic Corridor, a preferential trade zone stretching across the region.

Several smaller joint project deals were also signed, including establishing a $2 billion agriculture financing fund.

Geopolitics on the Silk Road:

Until very recently, it was widely assumed that the US would lead its western allies in a campaign against the Russian/Chinese deal to develop the Silk Road, but events have been reversing with remarkable speed.

With Obama desperately trying to keep the wars in Yemen, Syria, and Iraq from metastasizing across the region, Obama’s Middle East policy is at a crossroads, with none of the big issues likely to be resolved before his term ends. Clearly, the US President wants to concentrate on Asia and reduce the US presence in the Mid-East, a region that has bedeviled every President for more than a generation.

The Deal to Get Out:

In the midst of all this, and after more than a two year absence from Russia, Kerry and his entourage requested an immediate urgent meeting with Putin and Lavrov that was granted by the Kremlin.

There is widespread speculation over what might have taken place in the Kremlin meeting on May 8th. Yet, the fact that the meeting took place at all may be more important than any agreements reached, because it clearly shows some form of thaw in a relationship that’s in process.

The rumor out of Russia is that Kerry requested Putin’s help in resolving the ME conflicts and closing the nuclear deal with Iran, with the Russian President agreeing. The quid pro quo for Russia was the US lowering tensions in Ukraine. The issue of Crimea was apparently not even raised, while the visit ended with Kerry’s unprecedented warning to Kiev to abide by the Minsk 2 agreement for a truce in Ukraine’s eastern provinces.

Much of the news media is speculating that the US is starting to remove the ‘crime scene tape’ around the Kremlin. Whether this is really a US offer of an olive branch to Russia is still pretty much guesswork, and even if it were, how far the US is willing to go in accommodating the Kremlin is largely unknown. Stratfor, the popular internet intelligence newsletter, speculates that the US is willing to start easing sanctions on Russia.

Israel and the Gulf Kingdoms:

For the Israelis, any easing of tensions with Iran and Russia is very bad news. In the Middle East, Israel is the canary in the coal mine, and is always among the first to discern the faintest signs of political unrest in its region.

There's no denying the significance of Israel's reaction to the US/Iran nuclear deal and US coordination with Iran and Russia in Syria and Iraq. Israel placed all of its chips on its ability to stop the deals, and lost badly, while perhaps severely damaging its relationship with it largest ally, the US.

Now, the howls of protest and betrayal pour out of every media source in the country, and Israel is not the only one. Saudi Arabia also feels left out in the cold with the Iran deal.

Proposed Partnership with China and India:

If it were possible to put politics aside, there’s no question that China’s single best partner for the Road would be its giant neighbor India, bringing together the two most important markets for traders on the original ancient Silk Road. As the Associated Press reported on May 14, 2015:

“Both countries are members of the BRICS grouping of emerging economies, which is now establishing a formal lending arm, the New Development Bank, to be based in China's financial hub of Shanghai and headed by a senior Indian banker. India was also a founding member of the embryonic China-backed Asian Infrastructure Investment Bank.

The cooperation between China and India is only growing, and their needs appear to be compatible, as the AP goes on to note:

China is looking to India as a market for its increasingly high-tech goods, from high-speed trains to nuclear power plants, while India is keen to attract Chinese investment in manufacturing and infrastructure. With a slowing economy, excess production capacity and nearly $4 trillion in foreign currency reserves, China is ready to satisfy India's estimated $1 trillion in demand for infrastructure projects such as airports, roads, ports and railways.”

If India chooses to partner with China in the Silk Road, it could keep China building for the rest of the century, in a project that would combine the world’s most populous nations, with more than 2.6 billion people. With Russia already a partner, and Iran waiting in the wings to join, the project could add almost another quarter of a billion people, with a combined total of over one third the global population. A better fit would be hard to find.

But there is no shortage of historical baggage between China and India, ranging from a half century of unresolved border disputes; China’s growing relationship with Pakistan, India’s longtime adversary; and India’s close relationship with the US and Japan, both opposed to China’s claims in the South China Sea.

In a recent meeting in Beijing, China and India signed agreements for $22 billion in development projects, disappointing to many observers when compared to the $47 billion committed to the China/Pakistan deal. A former Indian diplomat, Bhadrakumar, argues, “that strategic distrust cannot be wished away,” and “...that India is not ready to replace the west as its development partner.”

It seems like the US influence with India has at least slowed prospects of recruiting India as a major Silk Road partner. Yet, the results are not so simple to predict since so many countries involved are dependent upon trade with China to the tune of hundreds of billions of dollars annually, and are also active trading partners with both Russia and Iran.

Even in the cold war, India became adept in its studied policy of co-existence with the Soviet Union and the US, which allowed India to play both sides. For pragmatic India, the choice of development partners may depend on the simple formula of 'following the money', given the fact that China is one of the few countries in the world with sufficient resources to finance the rebuilding of India's infrastructure.

The rush of western allies, including India, to join China's sponsored Asian Infrastructure Bank speaks clearly to the fact that western business is eager to take part in the Road projects. There are probably few banks in the world that would hesitate to finance major components of the project. However, whether the recent sea change in the US/Russian dynamic is a prelude for US support of the Silk Road project remains an open question.

Coming in June, Part 3: Prospects for Success and What it Means for Investors.

Title: Re: "New Silk Road" Part 2: Cold War Or Competition?
Post by: alan2102 on May 28, 2015, 08:00:51 AM
A1 The China Bull is BACK!

RE

http://www.zerohedge.com/news/2015-05-27/new-silk-road-part-2-cold-war-or-competition (http://www.zerohedge.com/news/2015-05-27/new-silk-road-part-2-cold-war-or-competition)

"New Silk Road" Part 2: Cold War Or Competition?

[snip]

The cooperation between China and India is only growing, and their needs appear to be compatible, as the AP goes on to note:

China is looking to India as a market for its increasingly high-tech goods, from high-speed trains to nuclear power plants, while India is keen to attract Chinese investment in manufacturing and infrastructure. With a slowing economy, excess production capacity and nearly $4 trillion in foreign currency reserves, China is ready to satisfy India's estimated $1 trillion in demand for infrastructure projects such as airports, roads, ports and railways.”

If India chooses to partner with China in the Silk Road, it could keep China building for the rest of the century, in a project that would combine the world’s most populous nations, with more than 2.6 billion people. With Russia already a partner, and Iran waiting in the wings to join, the project could add almost another quarter of a billion people, with a combined total of over one third the global population. A better fit would be hard to find.

[handwringing about "historical baggage" snipped -- alan2102]

Even in the cold war, India became adept in its studied policy of co-existence with the Soviet Union and the US, which allowed India to play both sides.For pragmatic India, the choice of development partners may depend on the simple formula of 'following the money', given the fact that China is one of the few countries in the world with sufficient resources to finance the rebuilding of India's infrastructure.

[BINGO! Ding Ding Ding!  The U.S. is sure as hell not going to do it. The U.S. cannot even undertake the rebuilding of its OWN infrastructure!  Don't be a fool. Follow the MONEY, honey. -- alan2102]

Good article, R.E.  Thanks. It largely corroborates what I am saying.
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on May 28, 2015, 08:50:56 AM
Quote

http://english.gov.cn/premier/news/2015/01/21/content_281475042663908.htm (http://english.gov.cn/premier/news/2015/01/21/content_281475042663908.htm)

European analysts confident about the prospects for China’s economy in 2015

Updated: Jan 21,2015

European business leaders and analysts are confident about the prospects for China’s economy in 2015.

“China has a very robust plan and a seamless execution of its economic transformation plan. This was the solid foundation that economic development had been successfully built on during the last 30 years and it will be a solid base for progress in the future,” president of the Swiss-Chinese Chamber of Commerce Kurt Haerri said.

“Further, it shall be noticed that China — unlike many countries in the West — has a long-term view and is therefore addressing the need for reforms timely and thoroughly,” Haerri added.

snip

Nicolas Musy, managing director of the nonprofit organization Swiss Center Shanghai, said that Swiss companies are actually experiencing a faster expansion of their businesses than before. “The reason is that seven percent growth today represents more added GDP than 11 percent growth in 2008".

Musy's point is important. In absolute terms, 7% growth today is like 12-14% growth a decade ago. A large, maturing economy like China's cannot possibly continue to grow, forever, at breakneck double-digit levels. It MUST slow down. And it is slowing down. This is good, healthy. If it were not slowing down, it would be a sign of an overheated situation, subject to violent correction.

China will probably settle into a 6-8% annual growth groove for the next decade or two. That rate would give a doubling each 10-12 years.

As usual, the China bears -- wringing their hands about China's growth "slowing" to 7% -- are laughably wrong. Newsflash: 7% is NOT slow in the sense of "too slow". Not for China. For Myanmar it might be, but not for China.  7% is slowER than before, and it is good.

The 12% growth days were possible, and necessary, for a good long while, to lift hundreds of millions out of poverty, and to generally expand the pie from its tiny starting size. That has now been accomplished, and the economy is beginning to mature. Not to mention the slowing population growth and aging population. With all that comes slower growth. It is all good. China is on a healthy trajectory.

Looks  fine to me:
(http://www.tradingeconomics.com/charts/china-gdp-growth-annual.png?s=cngdpyoy)
http://www.tradingeconomics.com/charts/china-gdp-growth-annual.png?s=cngdpyoy (http://www.tradingeconomics.com/charts/china-gdp-growth-annual.png?s=cngdpyoy)
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on May 28, 2015, 10:08:44 AM
New Chinese Bubble waiting to POP! Gotta love that graph for the Shanghai Composite Index.  Nearly DOUBLES in under a year!  Seriously folks, the companies in that index are worth 2X as much today as they were last year?  While just about the whole world is stagnant at best and in recession in many places? Meanwhile, they're buying all this stock leveraged up to beat the band.  What could go wrong?

Of course you are right. That bubble will pop. And you will have your day in the sun, proudly exclaiming "I told ya! I TOLD YA!" 

But... so what?  So they have a bubble, and the bubble pops.  What of it?  It is the nature of "free" markets (like, de-Stalinized semi-market economies) to create speculative bubbles, which then pop.  BFD.  We ourselves have had dozens of bubble-ish things (real estate, stocks, bonds, whatever) grow and then pop, over the last few generations. BFD. Doesn't mean squat. It so happens that we are in long-term (measured by century) decline, but this has little or nothing to do with the tendency of bubbles to form and then pop.

China's economic growth, and growth of influence and power across the continent, will continue unabated. China's ambitious infrastructure development plans will continue unabated. Billions of lives will be improved, probably dramatically. The China/BRICS juggernaut will roll forward, inexorably, for the rest of this century. It is now a near-certainty. Again barring black swans (asteroid hits earth, etc.).

Title: China Stocks are Crashing
Post by: RE on May 29, 2015, 01:39:15 AM
A21 will not be happy today.  :'(

RE

http://www.zerohedge.com/news/2015-05-28/chinese-stocks-are-crashing (http://www.zerohedge.com/news/2015-05-28/chinese-stocks-are-crashing)

Chinese Stocks Are Crashing

Tyler Durden's picture



 

The Shanghai Composite has extended yesterday's losses and is now officially in "correction" - down over 11% from its highs yesterday.

This is the biggest 2-day drop since August 2009

The much-heralded Shenzhen Composite is also down over 11% from yesterday's highs...

 

Intraday, a small opening ramp has been demolsihed in Shenzhen, CHINEXT, and CSI-300...

 

*  *  *

This has all happened since Hanergy's CEO exposed the endgame of the biggest Ponzi market ever

Charts: Bloomberg

Title: Re: Official Chinese Toast Thread
Post by: alan2102 on May 29, 2015, 08:04:59 AM

Bill Holter expresses things well:

Quote

http://www.jsmineset.com/2015/05/26/china-has-only-one-option/ (http://www.jsmineset.com/2015/05/26/china-has-only-one-option/)
 "China has built out their infrastructure and even “ghost cities” using credit.  Once the credit markets begin to default, they will be left with “stuff”, in place and will last for the next 50 to 100 years.  Roads, bridges, buildings, airports, ports, etc., you name it they have already built it.  And yes, their stock market will crash, their real estate market is already softening, in reverse and declining.  I am not saying it will be all rosy, to the contrary, there will be bankruptcies galore in China... with a caveat.  The “government” of China will go through this liquidation phase with the most gold in the world."  end quote


They will go through this liquidation phase with the most REAL ASSETS in the world, starting with the aforementioned roads, railways, buildings, ports, factories and so forth, and continuing with a massive amount of gold -- as Holter points out in this article, a bare minimum of 10,000 tons. (Yet another of their VERY SMART investments.)

And what will WE (the U.S.) go through this liquidation phase with? Why, with a handful of aging aircraft carriers and ICBMs, that's what. And crumbling infrastructure. And a massive, unsustainable medical/industrial complex. And drained gold reserves. And an obese and increasingly disabled population. And so forth.

Nothing that I've said should be construed as meaning that all will be smooth sailing for China/BRICs, or anyone. There is without doubt a crisis ahead, a "liquidation" as Holter put it, or a "reset" as others put it. It will not be pleasant for anyone. Everyone will take a hit, including China. However, my point has been, and remains, that it will NOT signal or initiate the collapse of industrial civilization and Malthusian dieoff. There will be a great moment of reckoning... and then life will go on, better in some places, worse in others. My bet is that it will be better in Eurasia, worse in the states. China and the BRICs will pick themselves up, dust themselves off, and carry on, and they have the REAL ASSETS with which to do so. We, on the other hand...
Title: Re: China Stocks are Crashing
Post by: alan2102 on May 29, 2015, 08:57:37 AM


A21 will not be happy today.  :'(
RE
http://www.zerohedge.com/news/2015-05-28/chinese-stocks-are-crashing (http://www.zerohedge.com/news/2015-05-28/chinese-stocks-are-crashing)
Chinese Stocks Are Crashing

R.E., I'm DELIGHTED that the Chinese stock bubble is deflating.  I LOVE IT when bubbles deflate.  Shaking-out the excesses is a natural process. It creates the solid base in which real growth takes root.

Ten years from today, we'll be looking at a Chinese economy twice its present size.


Title: Re: Official Chinese Toast Thread
Post by: steve from virginia on May 29, 2015, 10:29:38 PM
They (China) will go through this liquidation phase with the most REAL ASSETS in the world, starting with the aforementioned roads, railways, buildings, ports, factories and so forth, and continuing with a massive amount of gold -- as Holter points out in this article, a bare minimum of 10,000 tons. (Yet another of their VERY SMART investments.)

Assets are really liabilities. First, the Chinese cannot afford to use these things (or they would be using them now). If they cannot afford to use them now, they certainly won't be able to after they have thoroughly bankrupted themselves. 

Also, when a government holds gold it is different from when a citizen holds gold. A government is not a citizen, when it holds gold it makes itself in the image of a citizen and loses its natural place in the financial order as a consequence. It's like a government holding Picassos, instead of being the government it becomes a museum; a collector of nostalgia.

In industrialization there are no real assets, only fake ones. There is capital (non-renewable resources) and claims against it. All the claims are liabilities ... including labor ... this is what we are learning right now ... the hardest of all possible ways.
Title: Re: Official Chinese Toast Thread
Post by: jdwheeler42 on May 30, 2015, 04:35:23 AM
They (China) will go through this liquidation phase with the most REAL ASSETS in the world, starting with the aforementioned roads, railways, buildings, ports, factories and so forth, and continuing with a massive amount of gold -- as Holter points out in this article, a bare minimum of 10,000 tons. (Yet another of their VERY SMART investments.)

Assets are really liabilities. First, the Chinese cannot afford to use these things (or they would be using them now). If they cannot afford to use them now, they certainly won't be able to after they have thoroughly bankrupted themselves. 

In industrialization there are no real assets, only fake ones. There is capital (non-renewable resources) and claims against it. All the claims are liabilities ... including labor ... this is what we are learning right now ... the hardest of all possible ways.
I think the key point that Steve is skipping over here, because it is so obvious to him, is that all these "assets" increase the need for fossil fuels -- gasoline for the vehicles to drive on the roads, electricity for the factories, heat for the houses.

If the Chinese truly had been smart, they would have been investing massively in assets which do not require fossil fuels for their upkeep: passive solar houses, permaculture food production, manual workshops.  That no nation has does not bode well for the human race.
Title: Re: Official Chinese Toast Thread
Post by: Petty Tyrant on May 30, 2015, 12:52:49 PM
Having new trains and fast trains save a lot of time and fuel. Not flying with its fuel use. Not sitting in traffic taking several hours to get across or out of a city and not breathing brown smog. With the ffuel use from millions of individual stop start traffic gridlock.
Title: Re: Official Chinese Toast Thread
Post by: RE on May 30, 2015, 01:35:01 PM
Having new trains and fast trains save a lot of time and fuel. Not flying with its fuel use. Not sitting in traffic taking several hours to get across or out of a city and not breathing brown smog. With the ffuel use from millions of individual stop start traffic gridlock.

Lots of fast electric trains require a lot of electrical generating capacity, which is coming from coal fired electric plants.  They want to switch over to Nuke Puke, but there are already questions about the design and safety systems of these plants.  China is not known for having a good record on safety or on waste issues or pollution issues.  What are they going to do with the spent fuel rods?

Besides that, they are building inter-city trains, not solving transportation problems within metro areas with light rail systems that have stops every mile or two.

RE
Title: Re: Official Chinese Toast Thread
Post by: Eddie on May 30, 2015, 01:40:58 PM
What are they going to do with the spent fuel rods?

Temporarily store them in empty high-rise apartment buildings? Maybe in tunnels under the Olympic Stadium.
Title: Re: Official Chinese Toast Thread
Post by: azozeo on May 30, 2015, 02:15:02 PM
What are they going to do with the spent fuel rods?

Temporarily store them in empty high-rise apartment buildings? Maybe in tunnels under the Olympic Stadium.



Meet Onkalo Finland

http://www.youtube.com/v/oji3Eu0bUYE&fs=1
Title: Re: Official Chinese Toast Thread - Onkalo Finland Documentary
Post by: azozeo on May 30, 2015, 02:21:02 PM
http://www.youtube.com/v/gQ3dT7xcMgU&fs=1
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on May 30, 2015, 05:17:14 PM


Assets are really liabilities. First, the Chinese cannot afford to use these things (or they would be using them now).

Sorry, Steve, but the Chinese are indeed using all of their roads, railways, buildings, ports, ships, factories, bridges, fiber-optic cabling, planes and airports, trucks, and so on. Most of this stuff is being used to capacity, and more is being built every week. Have you ever read anything about China?

I think the key point that Steve is skipping over here, because it is so obvious to him, is that all these "assets" increase the need for fossil fuels -- gasoline for the vehicles to drive on the roads, electricity for the factories, heat for the houses.

Thanks for that explanation. Otherwise, Steve's post is incoherent.

I can see that, for someone trapped in the FF-essentiality frame, all industrial paths lead to destruction if they use any FFs at all. Apparently Steve did not get the memo outlining how and why FFs are no longer essential for industrial function *per se*. They are only essential (because of installed equipment/vehicle bases, etc.) for the limited period of transition away from them. And because of the newly-compelling economics of renewables -- as has become evident over the last 5 years -- the transition away from FFs might take only 50 years, instead of 75-100 years. We'll see. The price of FFs is a large factor; PRAY that the price does not remain so freaking low.

If the Chinese truly had been smart, they would have been investing massively in assets which do not require fossil fuels for their upkeep: passive solar houses, permaculture food production, manual workshops.

Manual workshops INSTEAD of industrializing? That would be if you don't mind hundreds of millions of people living in awful poverty, with life expectancy of ~40 -- the way it was in the bad old days, before industrialization.

I agree that passive solar is a great technology and should be more widely used. And of course I am not opposed to manual workshops. Everyone should have access to a manual workshop. They are indispensable. But to suggest that the Chinese invest in those things INSTEAD of industrializing would be insane.

You write "If the Chinese truly had been smart", as though you are smart, and they were not. That's bizarre. They lifted 500 million people out of desperate poverty, and probably saved the same number from certain early death, over the last 40 years. That's SMART.  I would say roughly 500 million times smarter than the average peak oil doomer, who has likely saved zero lives and rescued zero people from poverty.
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on May 30, 2015, 05:23:22 PM
when a government holds gold it is different from when a citizen holds gold. A government is not a citizen, when it holds gold it makes itself in the image of a citizen and loses its natural place in the financial order as a consequence. It's like a government holding Picassos, instead of being the government it becomes a museum; a collector of nostalgia.

What in the hell are you talking about?

If banks ought  not hold gold, then what do you think they should hold? Sea shells?
Title: Re: Official Chinese Toast Thread
Post by: Karpatok on May 30, 2015, 05:28:58 PM


Assets are really liabilities. First, the Chinese cannot afford to use these things (or they would be using them now).

Sorry, Steve, but the Chinese are indeed using all of their roads, railways, buildings, ports, ships, factories, bridges, fiber-optic cabling, planes and airports, trucks, and so on. Most of this stuff is being used to capacity, and more is being built every week. Have you ever read anything about China?

I think the key point that Steve is skipping over here, because it is so obvious to him, is that all these "assets" increase the need for fossil fuels -- gasoline for the vehicles to drive on the roads, electricity for the factories, heat for the houses.

Thanks for that explanation. Otherwise, Steve's post is incoherent.

I can see that, for someone trapped in the FF-essentiality frame, all industrial paths lead to destruction if they use any FFs at all. Apparently Steve did not get the memo outlining how and why FFs are no longer essential for industrial function *per se*. They are only essential (because of installed equipment/vehicle bases, etc.) for the limited period of transition away from them. And because of the newly-compelling economics of renewables -- as has become evident over the last 5 years -- the transition away from FFs might take only 50 years, instead of 75-100 years. We'll see. The price of FFs is a large factor; PRAY that the price does not remain so freaking low.

If the Chinese truly had been smart, they would have been investing massively in assets which do not require fossil fuels for their upkeep: passive solar houses, permaculture food production, manual workshops.

Manual workshops INSTEAD of industrializing? That would be if you don't mind hundreds of millions of people living in awful poverty, with life expectancy of ~40 -- the way it was in the bad old days, before industrialization.

I agree that passive solar is a great technology and should be more widely used. And of course I am not opposed to manual workshops. Everyone should have access to a manual workshop. They are indispensable. But to suggest that the Chinese invest in those things INSTEAD of industrializing would be insane.

You write "If the Chinese truly had been smart", as though you are smart, and they were not. That's bizarre. They lifted 500 million people out of desperate poverty, and probably saved the same number from certain early death, over the last 40 years. That's SMART.  I would say roughly 500 million times smarter than the average peak oil doomer, who has likely saved zero lives and rescued zero people from poverty.
   Thank you Alan. Very well said and argued.                             Karpatok
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on May 30, 2015, 05:44:00 PM
Having new trains and fast trains save a lot of time and fuel. Not flying with its fuel use. Not sitting in traffic taking several hours to get across or out of a city and not breathing brown smog. With the ffuel use from millions of individual stop start traffic gridlock.

Lots of fast electric trains require a lot of electrical generating capacity, which is coming from coal fired electric plants.
Yes, for now, and for some decades. But, thankfully, the coal binge is starting to plateau. See Greenpeace's very encouraging report on this:
http://www.greenpeace.org/eastasia/Global/eastasia/publications/reports/climate-energy/2014/The-End-of-Chinas-Coal-Boom-Briefing.pdf (http://www.greenpeace.org/eastasia/Global/eastasia/publications/reports/climate-energy/2014/The-End-of-Chinas-Coal-Boom-Briefing.pdf)

Also, the economics of renewables are improving so rapidly that it will soon not make economic sense to generate electric power with coal.

Quote
They want to switch over to Nuke Puke, but there are already questions about the design and safety systems of these plants.  China is not known for having a good record on safety or on waste issues or pollution issues.  What are they going to do with the spent fuel rods?

Nuclear technology has improved dramatically over the last 30 years. Some of the new ones don't have fuel rods. I am not nearly as informed in this area as I should be, so I won't attempt to answer further. But I do recommend that you look into it, before passing judgment.  I would only add that, again, renewables economy is so excellent now that nuclear may soon be shelved for economic reasons, i.e. it may simply not make $$ sense anymore.

Quote
Besides that, they are building inter-city trains, not solving transportation problems within metro areas with light rail systems that have stops every mile or two.

Nonsense! They are aggressively building-out metro trains in all the major and most of the not-so-major cities.

I took a peak and found this (astounding, as usual):
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130903000001&cid=1502 (http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130903000001&cid=1502)
 "The National Development and Reform Commission, the country's top economic planner, approved 4 trillion yuan (US$654 billion) investment in 37 local rail systems between 2008 and 2010 ....  The stimulus train pulled in again last year after the commission agreed to allocate another 8 trillion yuan (US$1.3 trillion) to 25 rail projects around the country."

$650 BILLION?!  $1.3 TRILLION?!

These are stupendous figures, especially as against the U.S.'s numbers which I'm sure are not even 1/10th that much.

Once again I am struck (needlessly, now) by the intelligence and forward-thinking of the Chinese. This is exactly the kind of stuff that NEEDS NEEDS NEEDS massive investment, just like that -- hundreds of billions, and trillions. This is how you build a civilization for long-term prosperity. We have a sterling example of the right thing to do, in front of our faces.
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on May 30, 2015, 05:55:06 PM
Another newsflash: China cuts energy intensity DRASTICALLY!

The world has cut its energy intensity by nearly 1% per year for the last 20 years; i.e. has reduced by that much the amount of energy needed to generate a unit of GDP. This is of course very good -- more output for  a lot less energy. The world is much more efficient than it was 20 years ago.  But China is  hitting the ball clean out of the park!  Nearly FIVE percent reduction in ONE year!  Amazing.

Quote

http://www.reuters.com/article/2015/01/20/china-energy-idUSL4N0UZ1QJ20150120 (http://www.reuters.com/article/2015/01/20/china-energy-idUSL4N0UZ1QJ20150120)
Mon Jan 19, 2015 10:34pm EST
China cuts energy intensity by 4.8 pct in 2014
BEIJING
  China beat a key energy efficiency target in 2014, cutting its energy intensity by 4.8 percent from a year earlier, the State Council said on Tuesday, as it tries to reduce pollution and greenhouse gas emissions.
 The government had aimed for a 3.9 percent cut in energy intensity after a 3.7 percent drop in 2013 in order to meet its target of cutting energy intensity to 16 percent below 2010 levels by 2015.
Title: Re: Official Chinese Toast Thread
Post by: Karpatok on May 30, 2015, 06:42:57 PM
Another newsflash: China cuts energy intensity DRASTICALLY!

The world has cut its energy intensity by nearly 1% per year for the last 20 years; i.e. has reduced by that much the amount of energy needed to generate a unit of GDP. This is of course very good -- more output for  a lot less energy. The world is much more efficient than it was 20 years ago.  But China is  hitting the ball clean out of the park!  Nearly FIVE percent reduction in ONE year!  Amazing.

Quote

http://www.reuters.com/article/2015/01/20/china-energy-idUSL4N0UZ1QJ20150120 (http://www.reuters.com/article/2015/01/20/china-energy-idUSL4N0UZ1QJ20150120)
Mon Jan 19, 2015 10:34pm EST
China cuts energy intensity by 4.8 pct in 2014
BEIJING
  China beat a key energy efficiency target in 2014, cutting its energy intensity by 4.8 percent from a year earlier, the State Council said on Tuesday, as it tries to reduce pollution and greenhouse gas emissions.
 The government had aimed for a 3.9 percent cut in energy intensity after a 3.7 percent drop in 2013 in order to meet its target of cutting energy intensity to 16 percent below 2010 levels by 2015.
  Again Alan, Kudos to you for your expertise. You and Snowleopard could make a really mentally healthy team at getting out some good news for a change. Thanks so much for your well said words, dimming the clapper of the death knell.    Karpatok
Title: Re: Official Chinese Toast Thread
Post by: Petty Tyrant on May 30, 2015, 06:52:12 PM
Another newsflash: China cuts energy intensity DRASTICALLY!

The world has cut its energy intensity by nearly 1% per year for the last 20 years; i.e. has reduced by that much the amount of energy needed to generate a unit of GDP. This is of course very good -- more output for  a lot less energy. The world is much more efficient than it was 20 years ago.  But China is  hitting the ball clean out of the park!  Nearly FIVE percent reduction in ONE year!  Amazing.

Quote

http://www.reuters.com/article/2015/01/20/china-energy-idUSL4N0UZ1QJ20150120 (http://www.reuters.com/article/2015/01/20/china-energy-idUSL4N0UZ1QJ20150120)
Mon Jan 19, 2015 10:34pm EST
China cuts energy intensity by 4.8 pct in 2014
BEIJING
  China beat a key energy efficiency target in 2014, cutting its energy intensity by 4.8 percent from a year earlier, the State Council said on Tuesday, as it tries to reduce pollution and greenhouse gas emissions.
 The government had aimed for a 3.9 percent cut in energy intensity after a 3.7 percent drop in 2013 in order to meet its target of cutting energy intensity to 16 percent below 2010 levels by 2015.

Also they have fast ferries that bypass land altogether although the crowding and lining up like livestock getting on and off is not nice. I rode one that must have been doing 200mph barely skimming the water, and i wondered why we dont have them.

No doubt  the 21st c goes to china as the 20th went to the us,  but only if all their supply chains ate not interrupted which means there has to be stability on all the countries they take food water and fuels resources from. Thats far from guaranteed As the locals will demand the food and water should be used for domestic needs if they have no surplus. china may have got to the party too late, time will tell.
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on May 31, 2015, 05:18:39 AM

No doubt  the 21st c goes to china as the 20th went to the us,
Bingo!
19th C - Britain
20th C - U.S.
21st C - China
22nd C - who knows? But my wild guess would be Africa

Quote
but only if all their supply chains ate not interrupted which means there has to be stability on all the countries they take food water and fuels resources from.
... and they are busily BUYING that stability. A little money goes a long way. A lot of money goes even farther. You've heard about China's pledge of $4 TRILLION to support development of its neighbors?

Quote
Thats far from guaranteed As the locals will demand the food and water should be used for domestic needs if they have no surplus. china may have got to the party too late, time will tell.
Nothing is guaranteed, but some things are likely. Water resources are an issue, but that issue can and will be addressed in several ways.  Baikal is 20% of the world's fresh water, waiting to be tapped. The Ob and other northern rivers dump into the arctic sea; this water could be used. Conservation offers huge benefits. And so on. Also, don't forget desalination -- which (I say at the risk of redundancy) becomes viable soon because of the new favorable economics of renewables. Dirt-cheap solar panels that don't have to be replaced in less than 50 years (delivering power IN EXCESS of energy cost for 47+ of those years) can desalinate a lot of water.

PS: forgot: a lot depends on the outcome of China's extensive afforestation/reforestation projects, e.g. the Great Green Wall project which I documented a few years ago on the China Potpourri thread. These projects will have a big impact on water, as trees are natural humidifiers and rain-makers, and usually function to preserve soil water. China's ambitious projects are (so far) partly successful, and partly failed; it is a mixed bag. We will see how smart they are in correcting the mistakes of the past and turning those failures into successes, over the next 30 years. A little birdie tells me that they are plenty smart enough to learn and correct course -- but that birdie COULD be wrong, I admit.   ;)
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on May 31, 2015, 08:48:57 AM
From up thread, near bottom of page 14:


Quote
they are building inter-city trains, not solving transportation problems within metro areas with light rail systems that have stops every mile or two.

Nonsense! They are aggressively building-out metro trains in all the major and most of the not-so-major cities.

I took a peak and found this (astounding, as usual):
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130903000001&cid=1502 (http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130903000001&cid=1502)
 "The National Development and Reform Commission, the country's top economic planner, approved 4 trillion yuan (US$654 billion) investment in 37 local rail systems between 2008 and 2010 ....  The stimulus train pulled in again last year after the commission agreed to allocate another 8 trillion yuan (US$1.3 trillion) to 25 rail projects around the country."

$650 BILLION?!  $1.3 TRILLION?!

These are stupendous figures, especially as against the U.S.'s numbers which I'm sure are not even 1/10th that much.

Once again I am struck (needlessly, now) by the intelligence and forward-thinking of the Chinese. This is exactly the kind of stuff that NEEDS NEEDS NEEDS massive investment, just like that -- hundreds of billions, and trillions. This is how you build a civilization for long-term prosperity. We have a sterling example of the right thing to do, in front of our faces.

I decided to do a brief fact-check re "the U.S.'s numbers ... I'm sure are not even 1/10th that much."

here:
http://www.downsizinggovernment.org/transportation/urban-transit (http://www.downsizinggovernment.org/transportation/urban-transit)
"The Department of Transportation's Federal Transit Administration has an annual budget of more than $10 billion, nearly all of which is spent on subsidies to state and local governments.2 In addition, the economic stimulus bill of 2009 added a further $8 billion in subsidies over a period of years.3 Through these subsidies and related regulations, federal policymakers play a major role in shaping urban transportation choices."

Wow! A whopping TEN billion! Plus few billion more, dribbled out over years. I'm blown away!  Blown away by the laughable stinginess of it, that is. A trifling 10-12 billion per year. That's -- what? -- about TWO PERCENT of the aforementioned Chinese 650 billion, and a negligible percent of the 1.3 trillion.

Is anyone surprised?

All the more amusing: I got these figures from a Cato Institute writeup, the purpose of which is to denounce federal/government spending for mass transit! Their purpose is to make spending look WAY TOO HIGH!  Can you believe that?  To them, the 10-12 billion is far too much. We've got to slash that down to 5 billion! or 2 billion! or better yet ZERO!

The Cato libertoons write: "Transit funding is costly to taxpayers, and it is not a proper function of the federal government.... The federal government should end its transit subsidies, and American cities should focus on more economically sound and consumer-driven approaches to easing congestion."  Uh huh. "More economically sound and consumer-driven", meaning funded by massively subsidized oil- and auto-related activity, including long-sunk costs running into many $trillions.

Actually, the libertoons make some decent arguments, but most of them depend on the fact that the U.S. made the disastrously-wrong decision, early on, to heavily support oil/autos, and now we are in a situation where it may not make sense to try to change course. You cannot, they say, retrofit low-density urban areas (i.e. insanely auto-dependent urban areas) with rail systems and expect the economics to make sense. Yeah, I get that. What THEY don't get, or don't want to admit, is the underlying insanity, and the way in which the present structure of urban areas was shaped by massive subsidization of the oil/auto sector.
Title: Re: Official Chinese Toast Thread
Post by: Eddie on May 31, 2015, 09:51:54 AM
22nd C - who knows? But my wild guess would be Africa

Try Russia. Maybe Antarctica.

I got these figures from a Cato Institute writeup, the purpose of which is to denounce federal/government spending for mass transit! Their purpose is to make spending look WAY TOO HIGH!  Can you believe that?  To them, the 10-12 billion is far too much. We've got to slash that down to 5 billion! or 2 billion! or better yet ZERO!

Unfortunately, these people are running the country.

You cannot, they say, retrofit low-density urban areas (i.e. insanely auto-dependent urban areas) with rail systems and expect the economics to make sense. Yeah, I get that. What THEY don't get, or don't want to admit, is the underlying insanity, and the way in which the present structure of urban areas was shaped by massive subsidization of the oil/auto sector.

Not even true. You can retrofit anything if the transportation is there first.

I think you make some cogent arguments about China, but China's leadership suffers from the same unlimited growth paradigm that got all the other empires in trouble. When they figure out how to prosper in a zero-growth economy I'll be impressed a lot more than I am now.
Title: Re: Official Chinese Toast Thread
Post by: steve from virginia on May 31, 2015, 11:36:50 AM
Quote

Sorry, Steve, but the Chinese are indeed using all of their roads, railways, buildings, ports, ships, factories, bridges, fiber-optic cabling, planes and airports, trucks, and so on. Most of this stuff is being used to capacity, and more is being built every week. Have you ever read anything about China?

http://www.wsj.com/articles/in-china-beijing-fights-losing-battle-to-rein-in-factory-production-1405477804 (http://www.wsj.com/articles/in-china-beijing-fights-losing-battle-to-rein-in-factory-production-1405477804)

http://marketrealist.com/2015/01/massive-overcapacity-plague-steel-industry-2015/ (http://marketrealist.com/2015/01/massive-overcapacity-plague-steel-industry-2015/)

http://www.ft.com/intl/cms/s/0/4f232cdc-cf45-11e1-bfd9-00144feabdc0.html (http://www.ft.com/intl/cms/s/0/4f232cdc-cf45-11e1-bfd9-00144feabdc0.html)

http://www.wsj.com/articles/more-than-1-in-5-homes-in-chinese-cities-are-empty-survey-says-1402484499 (http://www.wsj.com/articles/more-than-1-in-5-homes-in-chinese-cities-are-empty-survey-says-1402484499)

http://www.joc.com/port-news/big-ships-mean-big-investment-china%E2%80%99s-oversupplied-port-capacity-moody%E2%80%99s-says_20150210.html (http://www.joc.com/port-news/big-ships-mean-big-investment-china%E2%80%99s-oversupplied-port-capacity-moody%E2%80%99s-says_20150210.html)

http://www.reuters.com/article/2015/03/28/china-steel-idUSL3N0WU02W20150328 (http://www.reuters.com/article/2015/03/28/china-steel-idUSL3N0WU02W20150328)

Etc. etc. etc.

All industrialized countries have excess capacity, this is added to China's. Also, countries have currency advantage over (dollar-pegged) yuan.

How China economy actually works:

http://www.economic-undertow.com/2014/02/15/debtonomics-currency-crisis-3/ (http://www.economic-undertow.com/2014/02/15/debtonomics-currency-crisis-3/)

Quote
I think the key point that Steve is skipping over here, because it is so obvious to him, is that all these "assets" increase the need for fossil fuels -- gasoline for the vehicles to drive on the roads, electricity for the factories, heat for the houses.


Thanks for that explanation. Otherwise, Steve's post is incoherent.

Assets offer a real return over time. Industrial 'assets' offer nothing but symbolic 'worth' as measured by way of constantly inflated 'money-price'. As such, industries do not produce assets nor can they themselves BE assets, instead they are fashionable symbols. Keep in mind, should the 'money-prices' fail to inflate the assets are not liabilities either; they are worthless.

Industries don't produce a return, they are perpetually underwater, they require an ongoing debt subsidy. That this is so is self-evident: if any industry could pay for itself it would do so, there would be no debts because they would be paid by that one productive industry. Afterward, the same industry would make everyone on the planet rich.

This does not happen, the world is inundated with debts, the associated obligations are not distributed equally:

http://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491534656 (http://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491534656)

Industry cannot retire its own debts or make everyone rich: (debt-subsidized) industries only replace human labor with machines; the machines themselves cannot 'earn' anything, they cannot 'buy' the items that they reproduce. Only humans (by choice) can do so. 


Quote
If the Chinese truly had been smart, they would have been investing massively in assets which do not require fossil fuels for their upkeep: passive solar houses, permaculture food production, manual workshops.


Manual workshops INSTEAD of industrializing? That would be if you don't mind hundreds of millions of people living in awful poverty, with life expectancy of ~40 -- the way it was in the bad old days, before industrialization.

More people live in poverty now than at any time in history ... where did China succeed? A handful of Chinese are stupendously rich, other Chinese live like they did 100 years ago.

Quote
I agree that passive solar is a great technology and should be more widely used. And of course I am not opposed to manual workshops. Everyone should have access to a manual workshop. They are indispensable. But to suggest that the Chinese invest in those things INSTEAD of industrializing would be insane.

You write "If the Chinese truly had been smart", as though you are smart, and they were not. That's bizarre. They lifted 500 million people out of desperate poverty, and probably saved the same number from certain early death, over the last 40 years. That's SMART.  I would say roughly 500 million times smarter than the average peak oil doomer, who has likely saved zero lives and rescued zero people from poverty.

There is plenty of propaganda regarding how people lived before modernity, no doubt people lived as well or better before. China's breakdown was outcome of recurring waves of European- then Japanese invasion, war and conquest. China has always been productive/fertile and the Chinese intelligent and creative. Chinese clearly lived prosperously prior to industrialization, which was introduced by European colonialist regimes, btw.

It's too soon to determine outcomes but one thing to keep in mind: agriculture is foundation of any nation not industry:

http://www.theguardian.com/environment/chinas-choice/2014/apr/18/china-one-fifth-farmland-soil-pollution (http://www.theguardian.com/environment/chinas-choice/2014/apr/18/china-one-fifth-farmland-soil-pollution)
Title: Official Chinese Toast: Delusions of Techno-Cornucopians
Post by: RE on May 31, 2015, 02:51:16 PM

There is plenty of propaganda regarding how people lived before modernity, no doubt people lived as well or better before. China's breakdown was outcome of European- then Japanese invasion, war and conquest. China has always been productive/fertile and the Chinese intelligent and creative. Chinese clearly lived prosperously prior to industrialization, which was introduced by European colonialist regimes, btw.

It's too soon to determine outcomes but one thing to keep in mind: agriculture is foundation of any nation not industry:

http://www.theguardian.com/environment/chinas-choice/2014/apr/18/china-one-fifth-farmland-soil-pollution (http://www.theguardian.com/environment/chinas-choice/2014/apr/18/china-one-fifth-farmland-soil-pollution)

You can forget trying to convince A21 of any of this SfV, besides being an unquenchable China Bull he's also a techno-cornucopian.  He thinks the Chinese can solve their water problems with desalinization powered by solar panels!  ::)

A Chinese stock market crash won't phase him at all, it's just a shakeout on the way to greater glory!  A revolution overthrowing the current Goobermint wouldn't phase him either, just a reorganization.

(http://textually.org/3DPrinting/2014/03/11/main_air-pollution-linfen-bicycle___.jpg)
He ignores the fact the Chinese in Beijing ride their bicycles wearing air filtration masks because the air is so bad on days the wind is blowing the wrong way.  No problem they can't solve with a techno-fix, they'll build "clean" Thorium based Nuke Puke facilities!

He ignores the fact that the companies producing those cheap Solar PV panels cook their books and it's all funded on debt, and they are all going broke anyhow.

http://www.bloomberg.com/news/articles/2014-10-21/ldk-solar-affiliates-file-for-u-s-bankuptcy-protection (http://www.bloomberg.com/news/articles/2014-10-21/ldk-solar-affiliates-file-for-u-s-bankuptcy-protection)
http://www.bloomberg.com/news/articles/2014-02-22/bankrupt-solar-panel-maker-suntech-seeks-protection-in-u-s-1- (http://www.bloomberg.com/news/articles/2014-02-22/bankrupt-solar-panel-maker-suntech-seeks-protection-in-u-s-1-)
http://www.forbes.com/sites/chuckjones/2013/04/09/solar-companies-continue-to-go-bankrupt/ (http://www.forbes.com/sites/chuckjones/2013/04/09/solar-companies-continue-to-go-bankrupt/)

He ignores the fact the Chinese have a demographic nightmare on the horizon as a result of the 1 child policy.

(http://217.218.67.233/photo/20141015/382399_Ebola-scare-James-Fetzer.jpg)
None of this phases A21 at all.  He has a firm belief in China as the next World Superpower.  After that it's going to be Africa!  Yes, the place with non-stop civil wars and genocide, epidemics of HIV and Ebola will rise from the ashes in another century to overtake China!  It's a perpetual motion machine of Empires in A21's perception.  History will repeat itself endlessly this way.

If you do not grasp that all Empires have been built on continuously extracting more energy from the Earth, and that such copious quantities of energy necessary to build an empire and hold it together are rapidly dwindling away, then it is possible to believe in this perpetual motion machine of Empire.  If you believe that Thorium Nuke Plants will be built by the Chinese (and after that Cold Fusion plants too!) to replace their Coal fired electric generating capacity, it's possible to believe in the perpetual motion machine of Empire.  This is the type of argument A21 makes.

It's not a lot different than the arguments Moriarty (MKing) makes about NG and Solar as a means to maintain the techno-industrial lifestyle, just with a China Bull spin to it.  It's delusionary thinking by people who cannot accept the idea that this all is coming to an end now.

RE
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on May 31, 2015, 09:30:36 PM
All industrialized countries have excess capacity, this is added to China's.
Yes, China has had "excess capacity" for years. And has had "ghost cities" for years. And yet, the "excess capacity" strangely, magically gets soaked-up, and the factories do NOT close down, the ships do NOT get docked, the airports do NOT close down, etc., etc. They keep on using the things that you say they are not using. And the "ghost cities" FILL UP. In other words, they chug along. The deflationary meltdown does NOT happen.

Your original statement, to which I was responding, was this: "Assets are really liabilities. First, the Chinese cannot afford to use these things (or they would be using them now)." That's wrong. That's WILDLY wrong.

Quote
Assets offer a real return over time. Industrial 'assets' offer nothing but symbolic 'worth' as measured by way of constantly inflated 'money-price'.
Industry provides everything that you and I are now eating, wearing, living in, typing on, driving/riding in or on, etc., etc. EVERYTHING. Or almost everything. Unless you are the one in a million who: 1) grows all his own food, 2) makes all his own clothing from scratch (including making the thread and yarn from scratch), 3) builds his own house, 4) etc, etc.

You think that the food you eat, the computer that you use, the house that you occupy, etc. have only "symbolic worth" as opposed to REAL worth? They are only abstractions to you, without real value?

That's crazy-talk.

Quote
Industries don't produce a return, they are perpetually underwater, they require an ongoing debt subsidy.
More crazy-talk. They produce enormous returns WHICH YOU ARE ENJOYING THIS VERY MOMENT, in your lighted, heated, comfortable home, wearing comfortable clothing, typing on an incredibly powerful modern computing/communications device, etc., etc.

In other words, they produce huge use-value returns which you seem not to want to consider. You want to pretend that the only thing that exists is money, and debts or payback in money terms. That's not the case.

As far as the money terms go: yes, of course there are debts, which are constantly being paid back, retired, with interest. Often new debts are incurred, and then THEY are paid back, with interest. What of it?

There are a few entities, e.g. the U.S. government, that appear to have taken on more debt than they can ever pay back. That's bad, but it has nothing to do with whether or not industry is worthwhile. Even if all industries could never pay back their debts, they are still clearly worthwhile. They are the basis of all our great wealth. That includes you, personally: your great wealth is the product of industry.

If all industries could never pay back their debts, and the creditors started getting nervous, then we would have to cut a new deal with the creditors to make it worth their while to continue fronting the dough. Like, say, somewhat higher interest rates. It would be worth every penny, given how much benefit we have derived from industry. Without industry we would all still be poor, like we all were 500 years ago.

Quote
Afterward, the same industry would make everyone on the planet rich.
Industry HAS made masses of people rich -- not everyone on the planet, but at least 2/3rds of us. And the remaining 1/3 is dwindling (i.e. are on their way to becoming rich, too).

Quote
This does not happen,
This DOES happen. Manifestly. Just open your eyes and look.

Quote
the world is inundated with debts, the associated obligations are not distributed equally
Non-equal distribution of things is of course true. I never suggested otherwise. That is a different issue. But even with our present system of dreadfully UNequal distribution, the majority of us are rich. This cannot be denied.

Quote
Industry cannot retire its own debts or make everyone rich
Industry has made (past tense) several billion people rich -- richer than the nobility of, say, the year 1400.

Quote
More people live in poverty now than at any time in history
That may be true in terms of absolute numbers, because of population growth. But in relative terms -- i.e. percentage of population affected -- poverty has fallen off dramatically over the last 30 years. I say that your claim "MAY be true" in terms of absolute numbers, but I'm not sure. It might be untrue. One would have to actually go back and look at the numbers, which I doubt that you have done. But, if it is true that "more people [in absolute terms] live in poverty now than at any time in history", it is because  more people  ARE ALIVE now than at any time in history.

Global poverty reduction is a big story, e.g.:
Quote

http://www.theguardian.com/society/2013/mar/17/aid-trade-reduce-acute-poverty (http://www.theguardian.com/society/2013/mar/17/aid-trade-reduce-acute-poverty)
World poverty is shrinking rapidly, new index reveals
Tracy McVeigh
Saturday 16 March 2013
Some of the poorest people in the world are becoming significantly less poor, according to a groundbreaking academic study which has taken a new approach to measuring deprivation. The report, by Oxford University's poverty and human development initiative, predicts that countries among the most impoverished in the world could see acute poverty eradicated within 20 years if they continue at present rates.
[snip]
The study comes after the UN's latest development report published last week which stated that poverty reduction drives in the developing world were exceeding all expectations. It says: "The world is witnessing a epochal 'global rebalancing' with higher growth in at least 40 poor countries helping lift hundreds of millions out of poverty and into a new 'global middle class'. Never in history have the living conditions and prospects of so many people changed so dramatically and so fast."
The brighter global picture is the result of international and national aid and development projects investing in schools, health clinics, housing, infrastructure and improved access to water.
Yep! It is a great story. I've got some better information about it on my other computer. I'll try to pull that out and post it.

Note that the "schools, health clinics, housing, infrastructure and improved access to water" mentioned above are all, or mostly, products of INDUSTRIALIZATION, either directly or indirectly. Industry pays for itself over and over, in greater wealth, greater health, greater life expectancy, greater education, and other advantages, for billions of people.  No intelligent person who is even foggily aware of what is happening in the world can deny this.

These are tough times for doomers. On so many fronts, (NOT all fronts, but many), things are getting better and better. Very tough to square this with the gloom and doom narrative. Better to just deny it all!

Quote
... where did China succeed?
Are you joking? China was responsible for at least 2/3rds of the huge reduction in global poverty over the last 30 years. China has been spectacularly successful in reducing poverty. It is one of the great human success stories of all time. Nothing else even comes close.

Quote
A handful of Chinese are stupendously rich, other Chinese live like they did 100 years ago.
Steve, this is wildly wrong. The majority of Chinese live NOTHING like they did 100 years ago. If they did, then MOST OF THE 1.3 BILLION CHINESE NOW LIVING WOULD BE DEAD. Life expectancy in China is now 75 years -- nearly DOUBLE what it was 100 years ago, with all that that implies about quality of life. At least 500 million people have been saved from certain early death by the Chinese leadership over the last half-century. And a great many of them would have been UGLY deaths -- in agony, in famishment, in feverish throes of infection, etc.

At least that many have been saved from desperate poverty; vis:
http://en.wikipedia.org/wiki/Poverty_in_China (http://en.wikipedia.org/wiki/Poverty_in_China)  --  "Between 1981 and 2008, the proportion of China's population living on less than $1.25/day is estimated to have fallen from 85% to 13.1%, meaning that roughly 600 million people were taken out of poverty.[3][7]"

China still has its problems with poverty and most certainly with inequality. But to portray it as you have -- a tiny few super-rich, and everyone else a peasant same as a century ago -- no, that is wrong, wildly wrong. China now has a very large middle class -- larger in absolute terms than the U.S. middle class.

Quote
Chinese clearly lived prosperously prior to industrialization
Prior to industrialization, life expectancy for the mass of Chinese was  ~40. It was that low because of chronic malnutrition, chronic infection and infestation, dirty drinking water, no public health infrastructure, no medical care, no education, and on and on. Very "prosperous", yes!

Seriously, Steve: you might want to read some articles, or a book or two, about China sometime. Even just the wikipedia writeups are a great start. Be sure to include the ones about demographics, health, public health, and so on. You might find it interesting.

Quote
It's too soon to determine outcomes but one thing to keep in mind: agriculture is foundation of any nation not industry:
theguardian.com ... china-one-fifth-farmland-soil-pollution
Agriculture is key, no doubt.

As for China's contaminated soils: Welcome to late industrialism 1.0! That's the kind of thing that happens in the early to mid phases of development. It happened to the U.S. -- more in the area of polluted water and air. But then something funny happened: we cleaned it up. (A real accomplishment, btw, and I give the U.S. credit for that.) And China will clean up its act, as well. You have to have achieved a certain level of development before you can clean up the mess from earlier levels. The specifics of China's cleanup (heavy metals) will involve phytoremediation with accumulator plant species, and allied techniques. It is all doable, and they have the energy and ambition required to do it.




Title: Re: Official Chinese Toast: Delusions of Techno-Cornucopians
Post by: alan2102 on June 01, 2015, 06:36:40 AM
You can forget trying to convince A21 of any of this SfV, besides being an unquenchable China Bull he's also a techno-cornucopian.
That's right. You just CANNOT talk doom-sense into me. I'm stubbornly resistant, swayed as I am by the facts of the situation.

Quote
He thinks the Chinese can solve their water problems with desalinization powered by solar panels!  ::)
Yes, soon, as the economics of renewables improve. We might already be there, I'm not sure. The Saudis are already doing it (but of course they have the best solar pv economics of anyone, i.e. intense sunshine year-round):

http://reneweconomy.com.au/2015/saudis-build-worlds-first-large-scale-solar-powered-desalination-plant-82903 (http://reneweconomy.com.au/2015/saudis-build-worlds-first-large-scale-solar-powered-desalination-plant-82903)
Saudis to build world’s first large scale solar powered desalination plant - By Giles Parkinson on 22 January 2015

China and others will be next. Dirt-cheap renewable energy solves all kinds of problems!

Quote
A Chinese stock market crash won't phase him at all, it's just a shakeout on the way to greater glory!
That's exactly right. That's what it is. Just a blip in the big picture. Stock markets crash all the time... and then roar back. Economies grind on and end up bigger than ever.

Quote
A revolution overthrowing the current Goobermint wouldn't phase him either, just a reorganization.
It would phase me a little, but not much. The fundamentals impelling growth and development and indeed dominance of China are too strong to be held up for long by something like that.

Quote
He ignores the fact the Chinese in Beijing ride their bicycles wearing air filtration masks because the air is so bad on days the wind is blowing the wrong way.  No problem they can't solve with a techno-fix, they'll build "clean" Thorium based Nuke Puke facilities!
No, I don't ignore that, but I view it in perspective. It is a correctable problem, and it will be corrected -- like the U.S. solved its air pollution problems for the most part (problems which were TERRIBLE 60 years ago).

You're right: techno-fixes will solve these problems.

Quote
He ignores the fact that the companies producing those cheap Solar PV panels cook their books and it's all funded on debt, and they are all going broke anyhow.

[snipped: gaggle of urls re bankrupt solar pv companies]

R.E., you're such a hoot!

You're right, of course: the solar PV industry has had some major bankruptcies. It has been a rough business. You know why? Because of the fabulous runaway technical/production success of the solar PV industry! Due to greatly improved production techniques and economies of scale, the cost and price of panels has basically fallen off a cliff over the last 4 years. The result has been some manufacturers coming under great pressure, and some of them failing. It does not mean that solar PV is in trouble; it means the OPPOSITE of that.

vis:

Quote

http://breakingenergy.com/2015/05/11/thin-film-solar-cell-industry-in-transition-knockout-phase-is-over-profitability-and-vertical-integration-next/ (http://breakingenergy.com/2015/05/11/thin-film-solar-cell-industry-in-transition-knockout-phase-is-over-profitability-and-vertical-integration-next/)
Thin Film Solar Cell Industry in Transition: Knockout Phase is Over – Profitability and Vertical Integration Next
By Sven Lindström on May 11, 2015 at 11:00 AM
Prices of solar cells and solar panels have fallen dramatically over the last few years. This (and state subsidies) has been good for the advancement of this amazing renewable energy source, and solar energy can today be seen as an established energy source, reliable and well distributed, cost competitive with traditional non-renewable energy sources and with a very healthy annual growth in installed solar panels.
Annual solar cell installations have rocketed from less than 5,000 MW per annum before 2008 to around 40,000 MW per year today and still increasing rapidly. The market is especially strong in Japan, China, the US and Great Britain.
However, the flip side of these price reductions in solar cells and solar panels has been a consolidation, or rather a knockout, amongst suppliers of solar cells and solar panels. They have had a very difficult time making profits and most solar cell manufacturers have gone bankrupt, ceased production, been sold off or rescued.

Right. Victims of the  fabulous technical success of their industry.

Take another look: "Annual solar cell installations have rocketed from less than 5,000 MW per annum before 2008 to around 40,000 MW per year today and still increasing rapidly."  5,000 to 40,000 in 7 years means DOUBLING in slightly over 2 years. That is a mind-blowing rate of growth. That's a Moores-Law-type rate of growth. At that rate we could go 100% solar inside of a couple decades. Of course, that nosebleed rate will not be sustained, quite, because it would be impossible as the doublings get bigger. Still, it is a terrific rate of growth, and bodes well. Solar panels are far cheaper than they were 5 years ago, and this is making other energy sources (FFs) look bad. Fossil fuels will soon be uneconomic for most applications.

Quote
He ignores the fact the Chinese have a demographic nightmare on the horizon as a result of the 1 child policy.
Meaning what? A demographic nightmare... of underpopulation? Or are you referring to unmarried young men?

Quote
None of this phases A21 at all.  He has a firm belief in China as the next World Superpower.
You're right: Doesn't phase me much. The facts compel the conclusion that China will rise further and become at  minimum the dominant regional power, possibly a world superpower.

Quote
After that it's going to be Africa!
Now, R.E., be fair! I said "who knows?" who comes after China, and I said that Africa was my WILD GUESS. It remains my wild guess.

Quote
Yes, the place with non-stop civil wars and genocide, epidemics of HIV and Ebola will rise from the ashes in another century to overtake China! 
That's right, it might. Just like China rose from comparable ashes a century ago. The reason I say this is because Africa is so fantastically rich in natural resources and agricultural potential -- almost all totally untapped. Also, the climate is favorable for renewable energy production (solar), and they have vast water resources. Also, some of the fastest growing economies right now are in Africa. It remains a dark horse, and a wild guess for me, but it could happen. We'll see. China is investing a lot in Africa, and that will help also.

Quote
It's a perpetual motion machine of Empires in A21's perception.  History will repeat itself endlessly this way.
Pretty much, yeah. However, I see "empire" as morphing somewhat in definition. China is leading the way in this. The empires of the distant past were incredibly brutal, genocidal beasts. The empires of the recent past (Britain, U.S.) were bloody and spottily brutal -- bad, but not as bad as those of the distant past. And China seems to have taken the thing a further step up in the moral sphere. The Chinese have achieved everything they have achieved almost without any classical empire-like imperialistic adventurism. There have been no mass invasions, enslavements, pillaging, etc. Aside from their behavior toward Tibet, it has been a peaceful rise. They have a growing military sector, but it is not prominent in their overall scheme, i.e. spending on other sectors is vastly higher. Yes, I know that China has its civil and human rights issues; I'm not blind to that. I am looking at the BIG picture, relative to empires of past centuries. Overall, it has been pretty darn peaceful and benign.

The mongols (say) would move in and slaughter a half-million residents in a single day; meanwhile, the modern Chinese state has a few hundred political dissidents in halfway-humane prisons. Both are bad, but do you see the difference? I call it an improvement.

So yes, history will continue to repeat itself -- but perhaps with new twists. Perhaps MLK was right when he said that "the arc of the moral universe is long, but it bends towards justice", i.e. things are getting better and better, albeit slowly.

Quote
If you do not grasp that all Empires have been built on continuously extracting more energy from the Earth, and that such copious quantities of energy necessary to build an empire and hold it together are rapidly dwindling away, then it is possible to believe in this perpetual motion machine of Empire.
I fully grasp what you are saying. You are correct, historically. But things are now changing. We ARE now on the verge of creating a sort of perpetual motion machine with respect to energy, i.e. renewable energy is becoming cheap enough to allow the entire loop to be closed with renewable energy. It is now just a matter of incremental buildout. Power generated WITHOUT (or with only trace) depletion of non-renewable resources can be used to generate still more power-generating devices, and so on. It really is a game-changer, and we are at the threshold of it, right now. The era of extractive empire and ruinous exploitation of non-renewable resources is coming to a close, in this century.

Quote
  If you believe that Thorium Nuke Plants will be built by the Chinese (and after that Cold Fusion plants too!) to replace their Coal fired electric generating capacity, it's possible to believe in the perpetual motion machine of Empire.  This is the type of argument A21 makes.
It won't take thorium nuke plants, though they might be part of the mix for a while. Cold fusion: yeah, that too! Have you kept up with developments in that area? Remarkable. But even without cold fusion, things are on the right trajectory.  The perpetual motion machine of which you speak is, energetically, very much in the cards in the mid-term.

Quote
It's not a lot different than the arguments Moriarty (MKing) makes about NG and Solar as a means to maintain the techno-industrial lifestyle, just with a China Bull spin to it.  It's delusionary thinking by people who cannot accept the idea that this all is coming to an end now.
Once again, you are right. I am caught in self-deluded cornucopian/growth mania. I'm a hopeless case, R.E. You may as well give up on me.

People like me simply CANNOT ACCEPT that this is ALL COMING TO AN END, RIGHT NOW. So it was written in the Holy Scripture of dieoff.com, and so it MUST COME TO PASS.
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on June 01, 2015, 06:45:01 AM
  Again Alan, Kudos to you for your expertise. You and Snowleopard could make a really mentally healthy team at getting out some good news for a change. Thanks so much for your well said words, dimming the clapper of the death knell.    Karpatok

Karpatok, you need to have a one-on-one with R.E., to restore your fragile doomfaith and reinstate yourself as member in good standing of the Church of HansoNihilism. And you need to stop listening to wicked voices of deception like that cornucopian zealot alan2102.
Title: Re: Official Chinese Toast: Delusions of Techno-Cornucopians
Post by: RE on June 01, 2015, 06:47:37 AM


You can forget trying to convince A21 of any of this SfV, besides being an unquenchable China Bull he's also a techno-cornucopian.
That's right. You just CANNOT talk doom-sense into me. I'm stubbornly resistant, swayed as I am by the facts of the situation.

Quote
He thinks the Chinese can solve their water problems with desalinization powered by solar panels!  ::)
Yes, soon, as the economics of renewables improve. We might already be there, I'm not sure. The Saudis are already doing it (but of course they have the best solar pv economics of anyone, i.e. intense sunshine year-round):

http://reneweconomy.com.au/2015/saudis-build-worlds-first-large-scale-solar-powered-desalination-plant-82903 (http://reneweconomy.com.au/2015/saudis-build-worlds-first-large-scale-solar-powered-desalination-plant-82903)
Saudis to build world’s first large scale solar powered desalination plant - By Giles Parkinson on 22 January 2015

China and others will be next. Dirt-cheap renewable energy solves all kinds of problems!

Quote
A Chinese stock market crash won't phase him at all, it's just a shakeout on the way to greater glory!
That's exactly right. That's what it is. Just a blip in the big picture. Stock markets crash all the time... and then roar back. Economies grind on and end up bigger than ever.

Quote
A revolution overthrowing the current Goobermint wouldn't phase him either, just a reorganization.
It would phase me a little, but not much. The fundamentals impelling growth and development and indeed dominance of China are too strong to be held up for long by something like that.

Quote
He ignores the fact the Chinese in Beijing ride their bicycles wearing air filtration masks because the air is so bad on days the wind is blowing the wrong way.  No problem they can't solve with a techno-fix, they'll build "clean" Thorium based Nuke Puke facilities!
No, I don't ignore that, but I view it in perspective. It is a correctable problem, and it will be corrected -- like the U.S. solved its air pollution problems for the most part (problems which were TERRIBLE 60 years ago).

You're right: techno-fixes will solve these problems.

Quote
He ignores the fact that the companies producing those cheap Solar PV panels cook their books and it's all funded on debt, and they are all going broke anyhow.

[snipped: gaggle of urls re bankrupt solar pv companies]

R.E., you're such a hoot!

You're right, of course: the solar PV industry has had some major bankruptcies. It has been a rough business. You know why? Because of the fabulous runaway technical/production success of the solar PV industry! The cost of panels has basically fallen off a cliff over the last 4 years. The result has been some manufacturers coming under great pressure, and some of them failing. It does not mean that solar PV is in trouble; it means the OPPOSITE of that.

vis:

Quote

http://breakingenergy.com/2015/05/11/thin-film-solar-cell-industry-in-transition-knockout-phase-is-over-profitability-and-vertical-integration-next/ (http://breakingenergy.com/2015/05/11/thin-film-solar-cell-industry-in-transition-knockout-phase-is-over-profitability-and-vertical-integration-next/)
Thin Film Solar Cell Industry in Transition: Knockout Phase is Over – Profitability and Vertical Integration Next
By Sven Lindström on May 11, 2015 at 11:00 AM
Prices of solar cells and solar panels have fallen dramatically over the last few years. This (and state subsidies) has been good for the advancement of this amazing renewable energy source, and solar energy can today be seen as an established energy source, reliable and well distributed, cost competitive with traditional non-renewable energy sources and with a very healthy annual growth in installed solar panels.
Annual solar cell installations have rocketed from less than 5,000 MW per annum before 2008 to around 40,000 MW per year today and still increasing rapidly. The market is especially strong in Japan, China, the US and Great Britain.
However, the flip side of these price reductions in solar cells and solar panels has been a consolidation, or rather a knockout, amongst suppliers of solar cells and solar panels. They have had a very difficult time making profits and most solar cell manufacturers have gone bankrupt, ceased production, been sold off or rescued.

Right. Victims of the  fabulous technical success of their industry.

Take another look: "Annual solar cell installations have rocketed from less than 5,000 MW per annum before 2008 to around 40,000 MW per year today and still increasing rapidly."  5,000 to 40,000 in 7 years means DOUBLING in slightly over 2 years. That is a mind-blowing rate of growth. That's a Moores-Law-type rate of growth. At that rate we could go 100% solar inside of a couple decades. Of course, that nosebleed rate will not be sustained, quite, because it would be impossible as the doublings get bigger. Still, it is a terrific rate of growth, and bodes well. Solar panels are far cheaper than they were 5 years ago, and this is making other energy sources (FFs) look bad. Fossil fuels will soon be uneconomic for most applications.

Quote
He ignores the fact the Chinese have a demographic nightmare on the horizon as a result of the 1 child policy.
Meaning what? A demographic nightmare... of underpopulation? Or are you referring to unmarried young men?

Quote
None of this phases A21 at all.  He has a firm belief in China as the next World Superpower.
You're right: Doesn't phase me much. The facts compel the conclusion that China will rise further and become at  minimum the dominant regional power, possibly a world superpower.

Quote
After that it's going to be Africa!
Now, R.E., be fair! I said "who knows?" who comes after China, and I said that Africa was my WILD GUESS. It remains my wild guess.

Quote
Yes, the place with non-stop civil wars and genocide, epidemics of HIV and Ebola will rise from the ashes in another century to overtake China! 
That's right, it might. Just like China rose from comparable ashes a century ago. The reason I say this is because Africa is so fantastically rich in natural resources and agricultural potential -- almost all totally untapped. Also, the climate is favorable for renewable energy production (solar), and they have vast water resources. Also, some of the fastest growing economies right now are in Africa. It remains a dark horse, and a wild guess for me, but it could happen. We'll see. China is investing a lot in Africa, and that will help also.

Quote
It's a perpetual motion machine of Empires in A21's perception.  History will repeat itself endlessly this way.
Pretty much, yeah. However, I see "empire" as morphing somewhat in definition. China is leading the way in this. The empires of the distant past were incredibly brutal, genocidal beasts. The empires of the recent past (Britain, U.S.) were bloody and spottily brutal -- bad, but not as bad as those of the distant past. And China seems to have taken the thing a further step up in the moral sphere. The Chinese have achieved everything they have achieved almost without any classical empire-like imperialistic adventurism at all. Aside from their behavior toward Tibet, it has been a peaceful rise. They have a growing military sector, but it is not prominent in their overall scheme, i.e. spending on other sectors is vastly higher.

So yes, history will continue to repeat itself -- but perhaps with new twists. Perhaps MLK was right when he said that "the arc of the moral universe is long, but it bends towards justice", i.e. things are getting better and better, albeit slowly.

Quote
If you do not grasp that all Empires have been built on continuously extracting more energy from the Earth, and that such copious quantities of energy necessary to build an empire and hold it together are rapidly dwindling away, then it is possible to believe in this perpetual motion machine of Empire.
I fully grasp what you are saying. You are correct, historically. But things are now changing. We ARE now on the verge of creating a sort of perpetual motion machine with respect to energy, i.e. renewable energy is becoming cheap enough to allow the entire loop to be closed with renewable energy. It is now just a matter of incremental buildout. Power generated WITHOUT (or with only trace) depletion of non-renewable resources can be used to generate still more power-generating devices, and so on. It really is a game-changer, and we are at the threshold of it, right now. The era of extractive empire and ruinous exploitation of non-renewable resources is coming to a close, in this century.

Quote
  If you believe that Thorium Nuke Plants will be built by the Chinese (and after that Cold Fusion plants too!) to replace their Coal fired electric generating capacity, it's possible to believe in the perpetual motion machine of Empire.  This is the type of argument A21 makes.
It won't take thorium nuke plants, though they might be part of the mix for a while. Cold fusion: yeah, that too! Have you kept up with developments in that area? Remarkable. But even without cold fusion, things are on the right trajectory.  The perpetual motion machine of which you speak is, energetically, very much in the cards in the mid-term.

Quote
It's not a lot different than the arguments Moriarty (MKing) makes about NG and Solar as a means to maintain the techno-industrial lifestyle, just with a China Bull spin to it.  It's delusionary thinking by people who cannot accept the idea that this all is coming to an end now.
Once again, you are right. I am caught in self-deluded cornucopian/growth mania. I'm a hopeless case, R.E. You may as well give up on me.

People like me simply CANNOT ACCEPT that this is ALL COMING TO AN END, RIGHT NOW. So it was written in the Holy Scripture of dieoff.com, and so it MUST COME TO PASS.

That one says it ALL A21.  ::)

RE
Title: Re: Official Chinese Toast Thread
Post by: Surly1 on June 01, 2015, 08:26:54 AM
  Again Alan, Kudos to you for your expertise. You and Snowleopard could make a really mentally healthy team at getting out some good news for a change. Thanks so much for your well said words, dimming the clapper of the death knell.    Karpatok

Karpatok, you need to have a one-on-one with R.E., to restore your fragile doomfaith and reinstate yourself as member in good standing of the Church of HansoNihilism. And you need to stop listening to wicked voices of deception like that cornucopian zealot alan2102.

Why don't the two of you just get a room?
Title: Re: Official Chinese Toast Thread
Post by: Surly1 on June 01, 2015, 08:57:06 AM
Quote from: Alan
Quote from: RE
None of this phases A21 at all.  He has a firm belief in China as the next World Superpower.
You're right: Doesn't phase me much. The facts compel the conclusion that China will rise further and become at  minimum the dominant regional power, possibly a world superpower.

I have been away for over a week and have not had the time to read this entire thread.

But during my travels I visited with one of my best friends, a university prof who just returned from a teaching gig in China-- Xian, home of the terra cotta soldiers. He and the team he was with were functioning essentially as consultants to university professors in Xian; training the trainers in techniques of innovation. He and the other visiting profs were the "pros from Dover" who worked with teams of university profs via interpreters via large group and small group instruction.

Now I am getting this second-hand, and conversationally, and over cocktails. But the point I took away is that China wants to be better at innovation and out-of-the-box thinking. Seems that innovation is out of culture for the Chinese, who have typically operated in a top down, do-what-you're-told mode, and who have seen themselves as the center of the world for many centuries. Those who see the future clearly realize that they can no longer wait to be told what they need to do: they need to invent it.

My stats may be off, but what I recall my friend telling me was that ten years ago, there were 7 million enrolled in higher ed; in ten years they expect three times that many. And they want them ready to play at business and on the world stage. Contrast those aspirations for a rising generation with those of the sclerotic FSoA, where we reserve higher ed for those with trust funds or a willingness to mortgage their futures...

I got a little peek into China through a series of reflections in a hall of mirrors; yet I have to say that the call that China is "toast" is premature at best. Especially given the success of and subsequent deployment of renewables. The Chinese seem very serious about employing them, if for no other reason that to clean their air. To the extent that economic "growth" is wholly depended on available energy, the Chinese have a winning strategy using renewables. Plus they possess the political will to order it done.

What seems unknowable is the effect of the sheer mass of numbers on the Chinese and international markets. By 2020 the Chinese will have more college educated graduates in the workforce than the size of the entire US work force.

Who knows what the future holds? Yet I'd bet on the 21st century as belonging to the Chinese.
Title: Re: Official Chinese Toast Thread
Post by: steve from virginia on June 01, 2015, 09:37:27 AM

A21, Yr hopeless.

I guess you will just have to find out the hard way.

What's interesting is how seamlessly the industrialists' lies are amalgamated into a truthy-like substance. Number one lie is that consumer satisfaction is the same as economic return. Absence of return is manifesting itself just about everywhere on Planet Earth but this doesn't matter when yr industrially produced pants are "comfortable".

Thanks God for the pants industry!

:)



Title: Re: Official Chinese Toast Thread
Post by: alan2102 on June 01, 2015, 11:17:27 AM
A21, Yr hopeless.
It is true. Utterly and completely without hope or a shred of the salvational grace of the First Church of the Doomfaith.

Quote
I guess you will just have to find out the hard way.
Yes, I will have to find out the hard way. As civilization crashes into chaos and anarchy, I will rue the day that I did not listen to the wise and enlightened voices of the Church elders and others on DD.

Quote
What's interesting is how seamlessly the industrialists' lies are amalgamated into a truthy-like substance. Number one lie is that consumer satisfaction is the same as economic return.
Odd statement, since I never said or implied that.

It is revealing that you have no substantive reply, and no explanation for the wild falsehoods that you've uttered.  That's cool. I would rather bring the exchange to an end, and you seem to have little to offer of either factual content or rational argument.  On the other hand, some of your stuff is good for laughs -- just like R.E.'s. I'm saving it for posterity.

Title: Re: Official Chinese Toast: Delusions of Techno-Cornucopians
Post by: alan2102 on June 01, 2015, 11:50:10 AM
That one says it ALL A21.  ::)

Glad you enjoyed. I LOVE it when  you guys elect not to even attempt a rebuttal. Makes my life easier.   :)
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on June 01, 2015, 11:53:39 AM
  Again Alan, Kudos to you for your expertise. You and Snowleopard could make a really mentally healthy team at getting out some good news for a change. Thanks so much for your well said words, dimming the clapper of the death knell.    Karpatok

Karpatok, you need to have a one-on-one with R.E., to restore your fragile doomfaith and reinstate yourself as member in good standing of the Church of HansoNihilism. And you need to stop listening to wicked voices of deception like that cornucopian zealot alan2102.

Why don't the two of you just get a room?

There's an idea!

Hey, K, let's go for it.  I can handle it, if you can.   :)
Title: Re: Official Chinese Toast: Delusions of Techno-Cornucopians
Post by: Surly1 on June 01, 2015, 12:08:01 PM
That one says it ALL A21.  ::)

Glad you enjoyed. I LOVE it when  you guys elect not to even attempt a rebuttal. Makes my life easier.   :)

(https://realitybloger.files.wordpress.com/2013/05/strawman-full.jpg)

Thanks for playing, alan. Take home our board game as a lovely parting gift.
Title: Re: Official Chinese Toast Thread
Post by: alan2102 on June 01, 2015, 12:40:22 PM
In an adjacent browser tab, I'm reading an article by Mike Whitney, in which he quotes a Secretary of War Defense Ashton Carter speech, thus:

Quote

http://www.marketoracle.co.uk/Article50895.html (http://www.marketoracle.co.uk/Article50895.html)
 (The) ” Asia-Pacific…is the defining region for our nation’s future”… “Half of humanity will live there by 2050″ and that “more than half of the global middle class and its accompanying consumption will come from that region.”….”There are already more than 525 million middle class consumers in Asia, and we expect there to be 3.2 billion in the region by 2030…President Obama and I want to ensure that… businesses can successfully compete for all these potential customers. ….Over the next century, no region will matter more… for American prosperity.”

Hahaha! I swear, these guys literally make me LOL. They don't get it. It's OVER and they've LOST, but they want to pretend that they're still in the game.

At any rate, nice little statistic there: 525 billion middle class right now, and a multiple of that soon. Hmmm. Think there might be a bit of demand for products there, Bunkie?  Just a little? Enough to sop-up some of that excess capacity, perchance?

Compare with Steve's "just a few super-rich and everyone else is destitute".   ::)
Title: Re: Official Chinese Toast: Delusions of Techno-Cornucopians
Post by: alan2102 on June 01, 2015, 12:46:34 PM
Thanks for playing, alan.
You're welcome.

Hey, Surly, you're welcome to chime in with something substantive, any time you like. Call me onto the carpet, point out specific straw men, whatever. Demolish my arguments!  Go for it!

I won't hold my breath.
Title: Re: Official Chinese Toast Thread
Post by: Eddie on June 01, 2015, 01:40:03 PM
What exactly does Ashton Carter think the Chinese are going to buy from us? I mean, besides real estate. Maybe cars? Maybe electric cars that run off all those renewables they're ginning up?

Because last time I checked, there wasn't enough petroleum left on earth to fill up the tanks of 525 million Chinese middle-class drivers.

"Us" being a relative term anyway, meaning multi-national corporations that still have American names.

Of the top ten US exports, three are completely dependent on fossil fuels: oil, plastics, and organic chemicals. Even if you think supply is unlimited, I think you'll have to agree that we are net importers of fossil fuels. Hard to build an export economy when you use more than you sell.

Of the seven others, which are electronics, machinery, vehicles, pharmaceuticals, aircraft, medical equipment, and gems/precious metals....it looks to me like China can produce all those with very little help from Americans...at least from American PEOPLE, as opposed to companies with the same rights as people.

So who are Obummer and Carter really interested in helping? Not this middle-class American healthcare provider, who's being nickeled and dimed into poverty in his old age. That's for sure. Let alone the worker bees in what's left of American industry. Maybe they can all re-train as IT professionals?

Title: Re: Official Chinese Toast Thread
Post by: MKing on June 01, 2015, 02:02:16 PM

Because last time I checked, there wasn't enough petroleum left on earth to fill up the tanks of 525 million Chinese middle-class drivers.


So…525 million chinese drivers, we assume each owns a car, each car having a gas tank of approx. 15 gallon in size…each 15 gallons of gasoline requiring perhaps 30 gallons of refined crude to create it, 30 gal crude X 525,000,000 tanks to fill = 15,250,000,000 gallons. 15.25 billion gallons of crude / 42 = 375,000,000 barrels of oil.

So sure, it would require about 5 days of global oil production to fill those Chinese cars up. Easy. But how long can we fill them up?

Let us say that all us enlightened Americans, and everyone else, go EV, and we dedicate ourselves to making sure that the Chinese can drive those cars.

They need 375 million a day to fill their cars, every day. They must sure like