China’s epic hangover begins. China’s credit bubble has finally popped. The property market is swinging wildly from boom to bust, the cautionary exhibit of a BRIC‘s dream that is at last coming down to earth with a thud. Chinese stocks are flashing warning signs. The Shanghai index has fallen 30pc since May. It is off 60pc from its peak in 2008, as much in real terms as Wall Street from 1929 to 1933. – Telegraph/Ambrose Evans-Pritchard
Dominant Social Theme: Don’t look now but China is fading.
Free-market Analysis: Ambrose Evans-Pritchard, one of the very best mainstream financial journos, is back with another update on the Chinese economic collapse, and we appreciate his updates. We’ve been harping on this theme for at least two years. Just Google “Daily Bell” and “China’s Potemkin Village.”
For a long time we were a lonely voice. Throughout the 2000s, China was the hot story in the mainstream press, and for many it still is. One of Fidelity’s managers who has lost some 30 percent of his clients’ money in China just announced he believed the Red Dragon had turned the corner and that his fund would benefit considerably. Good luck with that.
For us, the Chinese miracle, as we eventually came to understand it, was nothing but a concoction of central bank monetary stimulation and the relaxation of state controls on market-driven family businesses.
The larger industrial and banking entities remained firmly under the control of top-level ChiComs – though in a more hidden manner. Westerners were often fooled into thinking there was competition between these vast industrial entities when there really was not.
This is quite akin to what goes on in South America where a handful of top people usually run the important infrastructure businesses while everyone else trades cell phones on the street. The trouble with this sort of economic structure is that it is highly dependent on central banking.
It is central banking – the printing of money from nothing – that drives this sort of economy because the centralization is artificial and could only be maintained either by brute force or by control of the money supply. Those who control the money are the ones inevitably who end up in charge of society.
full article at source: http://www.thedailybell.com/3354/Chinas-Meltdown-Continues
By Michael Pettis
I’m often referred to as a ‘China Bear’ and that’s a word I really hate. I’m not a China bear—I’m a skeptic. And, in some of the incredibly feverish statements we’ve heard in the press and among my former investment banking brethren about the prospects in China, as well as in some of the things we hear about the imminent collapse of China, I have to say that I find much of that to be very very questionable and frankly nonsense. There are some very very big problems that China faces and a lot of the long-term expectations that many of us have for China, whether it is that China will be the largest economy in the world in 5 years—I’ll take that bet, it won’t—or whether it’ll collapse in five years—I’ll also take that bet, it won’t. I think the truth is a little bit more boring—it’s somewhere in the middle.
full article here :http://www.financialsense.com/contributors/michael-pettis/2011/10/21/chinese-malinvestment-is-worse-than-most-people-think
by Staff Report at the Daily Bell
China risks hard landing as global woes spread … China’s carefully-managed soft landing is turning harder by the day, threatening to deflate the torrid credit bubble of the past three years. Beijing is alarmed by inflation above 6pc and price-to-income ratios for property in the rich coastal cities … “There is a large potential risk,” said Zhu Min, the deputy managing director of the International Monetary Fund and a former Chinese official. Mr Zhu said China had doubled the loan ratio from below 100pc of GDP before the Lehman crisis to roughly 200pc today. The danger is that this excess could start to unwind just as the West goes into a sharp downturn, and possibly a double-dip recession. China and emerging Asia are fundamentally in weaker shape this time, having used up their “fiscal cushions”, leaving them with little leeway to cope with a fresh global shock. – UK Telegraph:
full report at source:http://www.thedailybell.com/2940/Biggest-Story-in-the-World-China-Faces-Hard-Landing
International supervision over the issue of U.S. dollars (NYSE:UUP) should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country.” -China’s official news agency Xinhua
Gold (NYSE:GLD) and silver (NYSE:SLV) are often viewed by investors as a hedge against uncertainty. Although the two precious metals (NYSE:DBP) can cause heated debates about their role in an individual portfolio, many would agree even a small percentage of a portfolio should be in gold or silver. A study released earlier in the year by Oxford Economics recommends holding at least 5% of your assets in gold. What if countries apply these principles to their reserve holdings? The rising price of gold and silver has caught the attention of economic powerhouse, China (NYSE:FXI).
It is said that gold prices have not increased, fiat currencies have decreased. This is a concept not lost on the Chinese. A new Wikileaks release reveals the thought process behind gold and fiat currencies such as the U.S. Dollar and Euro. The new release says, ” China increases it gold reserves in order to kill two birds with one stone. The China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao)(04/28): According to China’s National Foreign Exchanges Administration, China’s gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold’s function as an international reserve currency. They don’t want to see other countries turning to gold reserves instead of the U.S. Dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaing the U.S. Dollar’s role as the international reserve currency. China’s increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB.”
full article here at source:http://www.marketoracle.co.uk/Article30289.html
By the daily Bell
China on Saturday condemned the “short-sighted” political wrangling in the United States over its debt problems and said the world needed a new global stable reserve currency. “China, the largest creditor of the world’s sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China’s dollar assets,” China’s official news agency said in a commentary. “International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country,” it said. – Reuters
Dominant Social Theme: It’s time to let Christine Lagarde and the other “wise leaders” at the IMF run the world’s money.
Free-Market Analysis: Well, this certainly comes as no surprise. We have been ringing the bell on this one for a while now. In fact, we ran a staff report back in March 2009, titled China Wants IMF to Manage New One-World Currency. The essence of what we said in that article, as well as many others dealing with Money Power’s insatiable desire to fasten a global currency yoke on the entire world’s population, is that out of the fiat-manufactured chaos we have today, it is likely that global order will be promoted as the cure to all our monetary ills. The IMF, a globalist organization to be sure, along with the World Bank, will be marketed by the establishment politicians, NGO think tanks and mainstream media outlets as the only logical way to alleviate the markets of their instability and overall confusion. The eurozone experiment alone should be enough of a wakeup call – for anyone that cares to see – that stitching together a bunch of systemically bankrupt nations’ fiat currencies does nothing to alleviate the rot inherent in the design and nature of the money-stuff system itself. We truly hope the world escapes from the grasp of the globalists’ fiat-fangs and that this plan of unification does not become a reality. What the world needs, in our opinion, are private currencies competing in a free-marketplace where governments have no involvement in either the issuance of currency or its management. Let the market decide what to use as money and keep the State and unelected global government agencies out of it.
Allowing Lagarde of the IMF and her bad run a world currency is
definitely not the answer to the world’s financial problems .Things are bad but
we are not fools ,just look at the mess Europe is in ,all we will be doing is
allowing a new super select group of untouchables dictate to the world terms
that suite the super rich and well connected and we have enough of this in Ireland
.These are the same people that are telling us Austerity is the answer and at
the same time they tell us we need to grow our economies .But their imposed
austerity measures are in fact squeezing every drop of available credit out of
the economy and without credit for small business to restock and upgrade we
might as well whistle dixi for our food on the table !If Austerity worked all
the poor countries would be in the middle of boom times .No a world currency on
these people’s terms is the road to eternal financial slavery. No Thanks !
Ben Bernanke stumbles from one public relations disaster to another. Fresh off his ludicrous statement to Congressman Ron Paul(left) that gold is not money, he has indicated that he’s ready to buy more of America‘s junk bonds using currency printed from nothing.
Will it help restore America’s “greatness?” Nope. Essentially this is just another tax on the American people achieved by the roundabout method of price inflation. It may push prices of gold and silver through the roof, but it’s not going to change anything about America’s failing economy. In fact, it will make things worse. And perhaps that’s just the point.
It’s seems to us that it’s Bernanke’s job to make things worse. The Anglosphere power elites that apparently run much of the world want to run the rest of it and they are making an aggressive push early in the 21st century. Take a step back and the patterns seem increasingly apparent. A lot of it has to do with austerity.
In Europe, austerity is a big issue. People are very upset about losing pensions and benefits, not to mention that they are facing higher taxes and the prospect of having many resources “privatized.” In America, the push for austerity is being provided via the Tea Party movement – and thus, to some degree, is being inflicted by the electorate itself.
Austerity – which will reduce the resources that people have available to them in the short run – is being accompanied in other parts of the world by food and water scarcity. Large parts of Africa face drought and starvation currently. In China – and throughout the BRICS – price inflation threatens economic stability. China itself is already suffering social insurrection, though few incidents are reported.
full article here at source:http://www.thedailybell.com/2687/Bernanke-Plots-Further-Stimulus.
If the Fed does introduce a new stimulus what is this likely
to mean for the dollar? For one thing we should have a dramatic drop in its
value and the Chinese can’t be too happy about this prospect. America must at
some stage address its own debts and if the truth was known Greece would be
bailing out the USA 14.5 Trillion in debts and now another 2.5 Trillion about
to be put on top who are they kidding America is bankrupt and should be in the Junk
members club !
I came across this interesting article on china’s economy
China’s trade surplus in the first half of this year fell 18.2 percent from a year ago to reach $44.93 billion. During the same period, total foreign trade value topped $1.7 trillion, up 25.8 percent year on year, with exports up 24 percent to reach $874.3 billion and imports surging 27.6 percent to hit $829.37 billion. In June, exports and imports reached $301.69 billion in value, up 18.5 percent year on year. In breakdown, June’s exports hit a record monthly high of $161.98 billion, up 17.9 percent, but the rate of growth decelerated from the 19.4-percent increase in May. Imports reached $139.71 billion, up 19.3 percent. The growth also slowed from the 28.4-percent increase in May.
China’s new bank lending shrank in May and money supply grew at the slowest pace since 2008, signifying the effects of the country’s tightening measures are paying off. New bank lending, an important indicator of the monetary policy, tumbled to 551.6 billion yuan ($84.86 billion) in May from April’s 739.6 billion yuan. The figure was also 100.5 billion yuan less than that of last May. Yuan-denominated loans outstanding at the end of May were 50.77 trillion yuan, 17.1 percent higher than a year ago. By the end of May, the broad money supply (M2), which covers cash in circulation and all deposits, hit 76.34 trillion yuan, up 15.1 percent year-on-year.
The rise of M2, following an increase of 15.3 percent in April, was the the slowest growth since November of 2008. May was the third consecutive month that the country registered slower M2 growth. The narrow measure of money supply, cash in circulation plus current corporate deposits, rose 12.7 percent from a year earlier to 26.93 trillion yuan. The increase was 17.2 percentage points lower than the same period of last year.
Read full article at source:http://www.marketoracle.co.uk/Article29172.html
Image via Wikipedia
Wednesday, July 06, 2011 –
by Staff Report
Here comes Moody’s with a blockbuster which may put China’s “White Knight” status, at least as far as Europe is concerned, in grave danger. In a report just released, the rating agency not only warns that China’s debt problem is “bigger than stated” (i.e., China is hiding a ton of ugly stuff off the books), but goes ahead to quantify it: “Of the RMB 10.7 trillion (about $1.6 trillion) of local government debt examined by the Chinese audit agency, RMB 8.5 trillion ($1.3 trillion) was funded by banks. However, Moody’s has identified another potential RMB 3.5 trillion ($540 billion) of such loans that the Chinese auditors did not discuss in their report….we find that the Chinese audit agency could be understating banks’ exposures to local governments by as much as RMB 3.5 trillion.” – ZeroHedge
Dominant Social Theme: China has done a splendid job of turning a communist system into a free-market one. Its prosperity is a result. Just look at the numbers.
Free-Market Analysis: Tyler Durden at the popular ZeroHedge website just came out with an article regarding the untrustworthiness of China’s financial numbers (see excerpt above). It’s taken from a Moody’s release that has found nearly US$1.5 trillion of Chinese loans may be under water. This corresponds to what we’ve been reporting (with increasing urgency) over the past two years. You can see our most recent article here, The Coming Chinese Depression. Below is an excerpt from what we wrote:
Of course, the success in our view has been initiated by printing fiat dollars – money from nothing. It is the same “success” that the Western central banks had prior to 2008 and look at how that ended. One cannot grow an economy year after year at nine percent per quarter and expect anything at the end of it but an inflationary depression. Chinese economic statistics are a case of “garbage in and garbage out.” And Western power elites must be quite aware of what is going to happen in China eventually. In our view it is a kind journalistic criminality that the mainstream media does not do more to alert the West about what is in store. When the Chinese economy crashes, the rest of the world will not be immune.
full article here : http://www.thedailybell.com/2621/Moodys-Report-Blasts-China-Solvency
This is a can of worms that nobody wants to even consider and I expect will disappear
from the media headlines very quickly. In any case what exactly can anybody do
about this? The Chinese authorities are not going to open up their book to any one,
least of all an American controlled ratings agency who has been bought off from
telling the truth about the American debts. They can’t deal with the hopeless
debts of the US what chance have they with china?.The Us should have a rating
of junk status and instead they have AAA!