Page 8 of 9 FirstFirst ... 6789 LastLast
Results 211 to 240 of 255

Thread: Charting China's Imminent Implosion

  1. #211
    China will be forced to engage in even more aggressive stimulus - Beijing's latest trade figures showed exports fell 1.3% in June from a year ago and imports shrank a more-than-expected 7.3%.
    Exports were in line with consensus expectations, with imports slightly weaker. In sequential terms, exports were down by 1.0% mom sa non-annualized in June, partly reversing a gain of 2.2% in May which was boosted by the frontloading from exporters. Imports remained weak, down by 0.6% mom sa non-annualized in June, albeit to a lesser extent (-6.1% non-annualized in May). China's trade surplus increased to US$50.4bn in June from US$41.7bn in May.
    The main culprit for the latest disappointin data? Exports to the US contracted significantly by 7.8% yoy in June, down further from -4.1% yoy in May. Exports to the EU also decelerated to a decline of 3% yoy in June from +6.1% yoy in May, and exports to Japan increased modestly by 2.4% yoy (v.s. +0.5% yoy in May). In contrast, exports to ASEAN accelerated significantly to +12.9% yoy in June from +3.5% yoy in May.
    Meanwhile, on the other side, imports of crude oil accelerated in June, while imports of steel products remained weak. Imports of iron ore continued to decline in volume terms, though increasing in value terms on higher prices. In value terms, crude oil imports accelerated to +8.2% yoy in June (vs. +5.5% yoy in May); steel products imports declined by 19.5% yoy in June (vs. -22.5% yoy in May); iron ore imports increased +34.6% yoy in June (vs. +24.0% yoy in May). In volume terms, crude oil imports were up by 15.2% yoy in June (vs. +3.0% yoy in May); steel products imports remained weak at 9.1% yoy in June (vs. -13.4% yoy in May); iron ore imports decreased by 9.7% yoy in June (vs. -11.0% yoy in May).
    According to Goldman, "weaker global demand, higher tariffs from the US and smaller impacts from the frontloading (compared to May) may have contributed to the slowdown in exports momentum in June, though depreciation in RMB over the past several months may have been supportive." As a result Goldman believes that exports momentum may remain modest in coming months, given moderate global economic growth, and combined with weak private demand, will result in easier domestic policy to maintain growth stability. The latest State Council meeting also announced measures to support exports (e.g., improving export tax rebate policies and lowering export insurance fees).

    More at: https://www.zerohedge.com/news/2019-...umbles-chinese
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment



  2. Remove this section of ads by registering.
  3. #212
    Something strange is happening in China: Beijing appears to be steadily losing control of the economy, which by definition is impossible for a centrally-planned, command economy such as China's, and yet the latest signals are clear and ominous.
    Consider the following: on Friday, just after Beijing reported the latest disappointing trade data for the month of June which saw exports falling 1.3% in June from a year ago - as exports to the US tumbled by 7.8% - and imports shrank a more-than-expected 7.3% ...

    ... the PBOC published the latest monthly credit stats, which showed that after several months of subdued credit growth, in June Total Social Financing - the broadest credit aggregate - rose by a significant 2,260BN yuan in June, the most in three months and easily beating the consensus print of 1900BN.

    This took place even as new CNY loans of RMB1,660 billion came slightly below consensus at RMB1,700 billion, while China's Shadow banking deleveraging continued for a third consecutive month and 14 of the last 16.


    And while China's M2 missed (8.5% YoY vs exp. 8.6%, skirting just above the all time low of 8.0% which it hit one year ago, which is to be expected considering China's record debt load requires ever more new debt to make an upward impression)...

    ... the better-than-expected TSF print was mainly a reflection of policy intentions: as a reminder, the government tried to loosen policy in June, for the second time this year, as after “taking the foot off the accelerator” in April and May, the economy started to slow meaningfully after 1Q and inflationary pressures were not as large as expected, the trade dispute posed a much bigger challenge than expected and there were rising level of anxieties among market participants following the Baoshang Bank takeover. As a result the government pushed for a reacceleration of government bond issuance, and, partially because of this and due to the lock up in the repo and Negotiable Certificates of Deposit markets, sharply lowered the level of interbank rates (overnight SHIBOR) despite normal seasonality pressures to the upside, pushing the rate to the lowest level since the financial crisis.

    On the other hand, and in light of the gargantuan January TSF injection, knowing the amount of government bond issuance was particularly large, and given there is no intention to be quite as aggressive with policy loosening, the PBOC apparently did not push for a very large amount of bank lending, which explains the modest miss in the bank loan increase. Meanwhile, Goldman notes that apart from fiscal and monetary policy measures, the government likely also took administrative measures to accelerate the pace of construction investment projects.
    And yet, despite all these actions, the effects on the economy "remain unclear" according to Goldman; in reality, the effects have bee negligible, and economic growth has continued to shrink, prompting many to ask if Beijing isn't losing control of the situation and a dreaded "hard-landing" is imminent? And while it is true that Beijing could - at least in theory do more - there is also the question if it isn't approaching the limit of its interventionist powers?
    Consider that Chinese local bond issuance - the most readily available instrument at the province level to fine tune growth - has been scorching in recent years, resulting in strong credit dynamics...

    ... and even so the latest Chinese manufacturing PMIs both slumped into contraction.

    It's not just soft surveys that continue to grind lower: June data released so far including PMIs, trade, and inflation - in particular PPI which is closely related to short-term demand growth...

    ... have not been encouraging, and as Bloomberg notes, "China is grappling with a slowdown that will see output growth slide to the weakest pace in almost three decades this year", as factors far beyond the trade war with the U.S. weigh on the world’s second-largest economy. And speaking of the trade war, it is becoming increasingly clear that Beijing desperately needs it to continue just to allow president Xi to use it as a convenient scapegoat for all that is wrong with China.
    Of which there is lots: GDP is forecast to grow at 6.2% in the second quarter, the slowest since at least 1992, with data due for release on Monday set to show whether the downward forces from external demand, deflationary factory prices and contracting manufacturing can be offset by stabilizing investment, brighter consumer sentiment and a rebounding property sector. In short, whether the government has lost control of the economy.


    More at: https://www.zerohedge.com/news/2019-...ontrol-economy
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  4. #213
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  5. #214
    As far back as 2013, China's macro-economic data has been 'questionably' smoothed at best, and outright fake at worst.
    Whether it is trade data ("never been faker" than in 2016) or aggregate production (2018's massive GDP distortions), as economist Nouriel Roubini once asserted, China just makes its numbers up.
    This month was no exception...
    Following China GDP's dramatic slowing to just 6.2% YoY - the slowest since record began - there was a delightful surprise to appease those who are wondering whether record credit injections and more easing measures than during the financial crisis had any effect at all.
    China retail sales and industrial production rebounded handsomely with the former spiking 9.8% YoY - the most since March 2018.

    There's just one thing though - the entire surge in retail sales (and industrial production) seems to have been triggered by an almost unprecedented sudden surge in auto sales to large (state-owned) enterprises...

    A 17.2% YoY explosion in sales to SEOs (up from just 2.1% in May) - the most since August 2011 - is almost too good to be believed (ok forget almost, it is too good to believe and seems like pure top-down manipulation of the data - whether sales were effectuated or not), echoing the kind of forced buying rush that occurred in 2009.

    And that did not end well.
    However, absent considerably more liquidity, forced credit injections, or a miracle, Auto sales are about to hit a wall as China's credit impulse begins to slow...



    More at: https://www.zerohedge.com/news/2019-...ail-sales-data
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  6. #215
    China’s 2nd Quarter growth is the slowest it has been in more than 27 years. The United States Tariffs are having a major effect on companies wanting to leave China for non-tariffed countries. Thousands of companies are leaving. This is why China wants to make a deal....
    — Donald J. Trump (@realDonaldTrump) July 15, 2019
    ....with the U.S., and wishes it had not broken the original deal in the first place. In the meantime, we are receiving Billions of Dollars in Tariffs from China, with possibly much more to come. These Tariffs are paid for by China devaluing & pumping, not by the U.S. taxpayer!
    — Donald J. Trump (@realDonaldTrump) July 15, 2019
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  7. #216
    One of the more confusing discrepancies in recent months was how, despite the weakening in the yuan and the escalating trade war between the US and China, there was virtually no drop in Chinese (official) reserves and thus, no capital flight.
    Well, "confusion no more", because as Goldman points out, amid the lingering trade tensions and continued depreciation of CNY in the first half of June, the bank's preferred gauge of FX flows showed a dramatic jump in June outflows to the tune of $20 billion compared to an inflow of $13 billion in May, while the exporters’ trade repatriation ratio fell further in June. At the same time, the bond market saw a net inflow of around $11BN, modestly lower than the $16BN in May.
    According to Goldman's calculation using the SAFE dataset of “onshore FX settlement”, non-banks showed net FX outflows of around US$13bn (vs. an inflow of US$19bn in May). This was composed of US$23bn in net outflow via outright spot transactions, and US$11bn in net inflow via freshly entered and cancelled forward transactions. Meanwhile, another SAFE dataset on “cross-border RMB flows” shows that on a net basis, the amount of RMB flow from onshore to offshore was around US$7bn.
    As a result, Goldman's usual "preferred" gauge (FX settlement data mentioned above and the cross-border RMB flows) showed a net FX outflow of around US$20bn in June, vs an inflow of US$13bn in May.



    According to Goldman, "trade tensions lingered in June and CNY depreciated in the first half of the month, contributing to the increased FX outflows" which of course were visible well prior thanks to the surge in cryptos since April, a big part of which was due to Chinese capital flight, which however failed to be documented in official data. Until now, that is.
    Meanwhile, exporters and importers’ net trade repatriation ratio continued to decline to 0.2 in June, from 0.4 in May and 0.9 in Q1 this year, implying exporters and importers having less incentives than before to repatriate their trade proceeds back when facing heightened trade uncertainties in June; this has an adverse impact on net capital flows.
    Finally, this data contradicts the data released by the PBOC earlier in the month, which showed that FX reserves stood at $3,119 billion in June, up $18bn from May. Based on Goldman's estimate, almost all the increase could be attributed to FX valuation effect. After adjusting for that, FX reserves were broadly unchanged in June. That is unlikely to be the case for longer now that capital flight from China has once again resumed in earnest.

    More at: https://www.zerohedge.com/news/2019-...hest-10-months
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment



  8. Remove this section of ads by registering.
  9. #217
    As far back as 2013, China's macro-economic data has been 'questionably' smoothed at best, and outright fake at worst. Whether it is trade data ("never been faker" than in 2016) or aggregate production (2018's massive GDP distortions), as economist Nouriel Roubini once asserted, China just makes its numbers up.
    And, as we pointed out earlier this week, this month was no exception, when following China GDP's dramatic slowing to just 6.2% YoY - the slowest since record began - there was a delightful surprise to appease those who are wondering whether record credit injections and more easing measures than during the financial crisis had any effect at all. To wit, China retail sales and industrial production rebounded handsomely with the former spiking 9.8% YoY - the most since March 2018.
    There's just one thing though - the entire surge in retail sales (and industrial production) seems to have been triggered by an almost unprecedented sudden surge in auto sales to - who else - the government itself, in the form large, state-owned enterprises. Think Cash for Clunkers on steroids - if the clunkers belonged to the Federal Government, and the new cars purchased were made by the Government.

    Yet there was one critical data set in China's manipulated economic data spreadsheet, which failed to get the royal goalseek treatment, one with dramatic implications for the broader market.
    According to Commodore Research, Chinese June data showed that furniture sales in China totaled only 18.4 billion yuan last month. This marks a year-on-year decline of 14% from the 21.3 billion yuan in sales that was reported last year for June 2018’s furniture sales.

    This is puzzling in light of the official Chinese data according to which the local housing market continues to hum along, firing on all cylinders, with the average, 70-city primary market property price rising 10.5% Y/Y in May.

    Alas, that does not seem feasible when one considers that furniture sales in China have now contracted on a year-on-year basis for eighteen straight months.
    What does this mean? As Commodore Research concludes, "we continue to believe that there is a good chance that the ongoing plummet in furniture sales in China is pointing to much greater weakness existing in the Chinese housing market than is generally being recognized."


    More at: https://www.zerohedge.com/news/2019-...bble-has-burst
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  10. #218
    Ever since the unexpected failure of China's Baoshang Bank in late May, which caused a freeze in the interbank market among smaller, less credible (and government backstopped) banks, and which sent rates on Negotiable Certificates of Deposit (NCDs), various bank bonds and assorted report rates sharply higher...

    ... investors have fretted that China appears on the verge of a "Lehman moment", where wholesale interbank liquidity and overnight funding markets suddenly lock up. The reason for this, as we explained last month, is that China’s short-term lending market for banks and other financial institutions has for years operated under the assumption that Beijing wouldn’t allow big losses in the event of defaults or insolvencies (hence the reason why Baoshang's failure was a shock). That confidence has been shaken by regulators’ unusual public takeover of the troubled Chinese bank near Mongolia last month, and the even more stunning public admission by the central bank that "not all of Baoshang Bank’s liabilities would necessarily be guaranteed." “Bank failure always causes greater concern given systemic fears," said Owen Gallimore, head of credit strategy at Australia & New Zealand Banking Group, suggesting greater pressure on the private sector ahead. Naturally, with China growing at the slowest pace in recent history, beset by shadow bank deleveraging, trade war, a shaky transition to a consumer economy and China's first ever current account deficit, these stresses come at a very bad time for the normal functioning of the local economy. Furthermore, nonbank borrowing through bond repos and interbank loans skyrocketed since China’s central bank began easing monetary policy in early 2018, hitting a net 74 trillion yuan ($10.7 trillion) in the first quarter of 2019, according to Enodo Economics, and up nearly 50% from a year earlier. As the WSJ redundantly warns, "funding troubles for brokerages and other asset managers therefore pose big problems for both financial stability and the real economy."
    Meanwhile, as we warned as far back as March 2017, problems would eventually migrate from the smallish market for negotiable certificates of deposit, used mostly by small banks, into the vastly greater bond repo market. Here, while key one-day and seven-day weighted average borrowing rates had remained low thanks to huge central bank cash injections - such as the 250BN yuan we described back in May - longer tenors such as the 1 month repo have marched sharply higher.

    As an aside, for those asking why NCD's matter, the answer is because as we first explained two years ago, numerous smaller banks had become acutely reliant on such shadow banking funding mechanisms as Certificates of Deposit, which had become the primary source of short-term funding for many of China's banks mid-size and smaller banks.

    As Deutsche Bank further explained, the banks most exposed to a shut down in this "shadow funding" pathway are medium-sized and small banks - such as Baoshang - for whom wholesale funding made up 31% and 23%, a number that has risen substantially in the interim period.

    Some more background: in China, the funding flow goes like this (per Bloomberg): big national banks lend to smaller regional lenders, which then provide financing to non-bank peers such as brokerages and funds. They in turn use the money to invest in corporate bonds.
    “Smaller banks play a key role in this chain,” said Ming Ming, chief fixed-income analyst of Citic Securities Co. Right now investors are quite "risk averse and everyone wants to mitigate counterparty risks. If things get worse, China’s financial market liquidity could collapse,” he added.
    In this context, troubles with NCD funding are troublesome, because as Bloomberg reported recently, in the aftermath of the Baoshang seizure, some Chinese banks and securities firms "tightened requirements for negotiable certificates of deposits that are used as collateral for funding." In some cases, private NCDs were shunned altogether, and some financial institutions now only accept NCDs sold by state-owned and joint stock banks as collateral while some have refused to lend money to investors pledging NCDs issued by lenders rated AA+ and below for now.
    Worse, as Bloomberg followed up last month, the interbank market had started to also freeze up as a result of counterparty suspicions: one month after Baoshang, Chinese bond traders in China are "rethinking counterparty risks as shock waves from a government takeover of a bank ripple through the country’s financial markets."
    As a result, and in an ominous echo of what happened before, and certainly after the Lehman failure, it suddenly got far harder for corporate bonds to be accepted as collateral for repo financing as lenders increasingly demand top quality bonds such as Chinese sovereign bills and policy bank notes as pledges, with Bloomberg noting that "traders are having second thoughts on taking even AAA rated short-term bank debt as security in the wake of last month’s seizure of Baoshang Bank"
    As a result, funding among China’s financial institutions has become clogged, in some cases to the point of paralysis, which has already caused borrowing costs to spike for brokerages and smaller banks. All this could mean even higher default rates one year after China reported the highest amount of bonds defaults in modern history.

    Meanwhile, in the aftermath of the Baoshang failure, one of the most opaque areas of China’s credit markets - the practice of companies buying their own bonds - has been getting far tougher, and is further contributing to financing difficulties that are already bedeviling the nation’s policy makers.
    As Bloomberg discussed last month, at issue is a sharp increase in scrutiny by financial institutions of the collateral that their counterparties offer up in the repurchase market, a crucial channel for short-term funding. If the debt sold by issuers that indirectly purchased a portion of their own bonds - which could account for as much as 8% of China’s corporate bonds, according to Citic Securities - is shunned, that would squeeze liquidity for a swathe of the nation’s businesses, a funding freeze that spreads beyond China's banking sector and affects even the highest quality corporations.
    That's precisely what appeared to be happening over the past two months when despite regulators’ best efforts to a potentially catastrophic seizing up in the repo market and short-term collateralized lending between banks, some institutions moved to avoid riskier securities. The moves, as Bloomberg notes, "showcased the fragility of confidence toward borrowers that lack state backing in a financial system still dominated by state-sector banks."
    Conditions became especially challenging for firms that obtained funding via unorthodox methods: one such practice is known as "structured issuance", where a company transfers cash to an asset manager to buy a slice of the bonds the company is itself selling. The manoeuvre helps give the appearance of greater demand for its securities and stronger ability to obtain funding. What could make the practice untenable is if asset managers can no longer use those securities held in custody as collateral for repos.
    “Since some repo transactions have defaulted recently, it is unclear whether companies can continue to borrow money from the structured issuance method, said Meng Xiangjuan, chief fixed-income analyst at SWS Research Co. in Shanghai. “If it stops, some issuers will certainly face difficulties operating their business normally, and their debt-repayment pressure will rise,” she said.
    It gets worse.
    As Bloomberg reported recently, while the practice of self-financing a portion of bond issuance is well known among credit analysts and ratings companies, "observers have been loath to name the firms involved, making this a particularly murky part of China’s debt market." Citic Securities, for its part, hazarded a total of about 1.5 trillion yuan ($218 billion) worth of securities outstanding that were sold in part via structured issuance.
    And so, in addition to the somewhat specialized NCD market, the one place where China's creeping funding freeze has become apparent is in the repo market, which is collateralized by bonds and other securities which the market no longer accepts at fave value.
    This creeping "Ice Nining" of China's banking system, and its closest encounter with the proverbial "Lehman moment" yet, came overnight when, inexplicably, the four-day repo rate on China’s government bonds (i.e., the cost for investors to pledge their Chinese government bond holdings for short-term funding) on the Shanghai exchange briefly spiked to 1,000% in afternoon trading!

    It is unclear what may have snapped, because as of 3:30pm local time, the repo rate had fallen back to 3.1%, which begs the question: did some bank just have a sudden liquidity run/freeze and was willing to pay anything for immediate access to funding? An exchange official had no idea what had caused the massive spike, and an official told Bloomberg that the Shanghai exchange needs to check details of the trade before it can comment.


    More at: https://www.zerohedge.com/news/2019-...1000-overnight
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  11. #219
    China’s official demographic figures, including the now-cliched “country of 1.4 billion people
    ”, seriously misrepresent the country’s real population landscape. The real size of China’s population could be 115 million fewer than the official number, putting China behind India in terms of population.

    This massive error, equal to the combined populations of the United Kingdom and Spain, is a product of China’s rigged population statistics system, influenced by the vested interests of China’s family planning authority.

    To start with, the raw data of China’s population figures were “adjusted”. China’s total fertility rate, or the number of kids per woman throughout her life, dropped below the watershed level of 2.1 in 1991, from which moment the population size of the next generation would be smaller than the current one, and the average total fertility rate was 1.36 in 1994-2018, according to data from census and surveys. However, the family planning authority in charge of the country’s population control refused to believe the numbers and “adjusted” the rate to 1.6-1.8 and, accordingly, the official population size.





    For instance, the real total fertility rate in 2000 was 1.22, according to a census result, but the government revised it to 1.8. Accordingly, the country had 14.1 million new births in 2000, but the government revised the figure by 26 per cent to 17.7 million. A census, which is conducted every 10 years, should provide the truest picture of China’s demographic situation. But for the 2000 census, the government was unhappy about the original finding of 1.24 billion and revised it up to 1.27 billion.

    The basis for these adjustments, according to the Chinese government, is the size of primary school enrolment. For the official statisticians, the primary school enrolment data should be reliable because public education covers every Chinese child. They were wrong, however, because primary school enrolment data in China is often inflated so that local authorities can claim more education subsidies from Beijing.


    In 2012, one school in Anhui was found over-reporting its student size by 42 per cent to claim subsidies, and another school in Hubei province was discovered in the same year over-reporting student size by more than 300 per cent – and these two cases are the tip of an iceberg.

    According to a report by CCTV on January 7, 2012, the Jieshou city in Anhui province reported 51,586 primary school students, when the actual number was only 36,234, allowing them to extract an additional 10.63 million yuan (about US$1.54 million) in state funding. On June 4, 2012, China Youth Daily reported that a middle school in Yangxin county, Hubei province reported 3,000 students, while the actual number was only 700.

    The latest census in 2010 also shows the tendency of over-reporting. For example, the original aggregated population of Fujian province was only 33.29 million, which was revised to 36.89 million. China’s government claimed it found 1.34 billion people during the census, but there were inconsistencies. For instance, government data showed that China had 366 million new births in 1991-2010, but the group aged 0-19 in 2010 census was only 321 million.


    The official number of births in 2011-2018 is also overestimated by 40 million. While Beijing is overestimating new births, it is underreporting the other end of population change – death. Some Chinese families have a tendency of not reporting deaths to the government in order to keep receiving social welfare.

    Also, according to UN data, there was a net international emigration of 8 million from China in 1991-2018. But Chinese officials ignored this data.



    China’s population to peak in 2023, five years earlier than official estimates




    More at: https://www.scmp.com/comment/opinion...inflated-hide?
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  12. #220
    Bank of Jinzhou has crawled in Baoshang's foosteps and is about to be seized by the government. According to Reuters and Bloomberg, Bank of Jinzhou recently met financial institutions in its home Liaoning province to discuss measures to deal with liquidity problems, and in a parallel bailout to that of Baoshang, the bank was in talks to "introduce strategic investors" after a report that China’s financial regulators are seeking to resolve its liquidity problems sent its dollar-denominated debt plunging.
    Officials including those from the People’s Bank of China and China Banking and Insurance Regulatory Commission recently held a meeting with financial institutions in Bank of Jinzhou’s home province of Liaoning to discuss measures to resolve the lender’s liquidity issues, Reuters reported Wednesday.
    In response to market fears the bank issued a statement on Thursday that "currently, Bank of Jinzhou’s business operations are normal overall,” which however did not refer to its liquidity situation. "Recently, the bank’s board of directors and some major shareholders have been in talks with several institutions that wish to and have the ability to to become strategic investors" adding that talks have been “going smoothly.”
    By strategist investors it of course meant banks, backstopped by the government, who would "absorb" the bank, effectively nationalizing it a la what happened with Baoshang. The only question is whether stakeholders would also be impaired.


    Incidentally, back in early June when first reporting on the resignation of the bank's auditors, we said that "the real question facing Beijing now is how quickly will Bank of Jinzhou collapse, how will Beijing and the PBOC react, and what whether the other banks on the list above now suffer a raging bank run, on which will certainly not be confined just to China's small and medium banks."
    The answer: less than 2 months.
    Unfortunately for China, it won't stop there. As a reminder, China’s smaller lenders have been under growing scrutiny since Baoshang Bank's failure and takeover which led to a sharp repricing of risk for much of China’s banking system which had long operated under an assumption that policy makers would support firms in trouble.

    More at: https://www.zerohedge.com/news/2019-...about-collapse
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  13. #221
    Profits earned by China's industrial firms contracted in June after a brief gain the previous month, fuelling concern that a slowdown in manufacturing from a bruising trade war will drag on economic growth.China's industrial profits have been softening since the second half of 2018 as the economy slowed and the U.S.-China trade dispute escalated, with many industrial firms putting off business decisions and scaling back manufacturing investment.
    Economic growth in the second quarter slowed to a near 30-year low.
    Industrial profits fell 3.1% in June from a year earlier to 601.9 billion yuan ($87.5 billion), according to data released by the National Bureau of Statistics (NBS) on Saturday, following a 1.1% gain in May.
    In the first six months, industrial firms earned profits of 2.98 trillion yuan, down 2.4% from a year earlier, compared with a 2.3% drop in January-May.
    The drop in first-half profits was driven by declining profits in the auto, oil processing and steel sectors, Zhu Hong of the statistics bureau said in a statement accompanying the data.
    Producer price inflation, one gauge of industrial profitability, eased to zero in June from a year earlier, rekindling worries about deflation, which could prompt authorities to launch more aggressive stimulus measures.

    June marked the first full month of higher U.S. tariffs on $200 billion of Chinese goods, which the United States imposed after trade talks broke down. Both exports and imports fell.

    More at: https://news.yahoo.com/chinas-indust...021011645.html
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  14. #222
    Step aside Baoshang Bank, it's time for Chinese bank bailout #2.
    Last Thursday, when reporting on the imminent failure of yet another Chinese bank in the inglorious aftermath of Baoshang Bank's late May state takeover, we dusted off a list of deeply troubled Chinese financial institutions that had delayed their 2018 annual reports...

    ... and noted that the #2 bank on this list, Bank of Jinzhou - with some $105 billion in total assets - recently met financial institutions in its home Liaoning province to discuss measures to deal with liquidity problems, and in a parallel bailout to that of Baoshang, the bank was in talks to "introduce strategic investors" after a report that China’s financial regulators are seeking to resolve its liquidity problems sent its dollar-denominated debt plunging.
    Fast forward just three days later, when said failure-cum-bailout is now official: three months after Baoshang Bank was seized by the government in a historic first, Bank of Jinzhou was just bailed out, winning government-backed "reinforcement" on Sunday as three state-controlled financial institutions said they would take at least 17.3% in the troubled lender, whose shares have been suspended since April.
    Industrial and Commercial Bank of China (ICBC), the country’s largest lender by assets, China Cinda Asset Management and China Great Wall Asset Management, two of China’s four largest distressed debt managers, said on Sunday they would take stakes in Bank of Jinzhou, Reuters reports.


    As part of the rescue package, ICBC’s ICBC Financial Asset Investment unit signed an equity transfer agreement to invest up to 3 billion yuan ($436 million) in a 10.82% stake of Bank of Jinzhou, it said in a statement filed to the Shanghai Stock Exchange. Hours after the state lender’s announcement, Cinda said in a statement to the Hong Kong Stock Exchange that its wholly owned Cinda Investment Co would invest in a 6.49% stake in Bank of Jinzhou, though it didn’t give the value of the deal.
    China Great Wall also said it would take a stake in Bank of Jinzhou, according to a statement sent to Reuters. It did not elaborate on the value of the deal or the size of the stake.
    The investments come as regulators scramble to diversify their approach to supporting highly indebted smaller banks and contain financial risks.
    On Friday, Reuters reported that China’s banking and insurance regulator told the country’s biggest distressed debt managers to prepare contingency plans to take over or invest in high-risk small and medium-sized Chinese banks as fractures in the inter bank funding market emerged.
    “The investment is to serve country’s supply-side reform in the financial sector and enhance the bank’s capability to serve the real economy,” the ICBC said in its statement. The deal will be conducted with the unit’s own funds, ICBC added.

    More at: https://www.zerohedge.com/news/2019-...ets-bailed-out
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  15. #223
    For some unexplained reason, investors naively believe that in a country where, by now everyone knows that all the official government data is fake and manipulated and goalseeked to serve specific political goals, the corporate data is somehow more accurate or credible.
    Hopefully that will now change, because as Shanghai's Yicai Global reports, China's securities regulator has suspended 43 IPOs and refinancings handled by the country's second-largest accounting firm, including IPOs on the country's new Star Market "Nasdaq-style" trading venue, as the company is probed for allegedly falsifying information.
    Ruihua Certified Public Accountants, which audits almost a third of all listed companies in China, has been implicated in a scandal involving the infamous chemical maker Kangde Xin Composite Material, which we profiled back in January when we noted that the bankrupt company was reporting cash 15 times greater than due debt, up until the moment it defaulted.
    Specifically, the accounting firm is accused of inflating profits by CNY11.9 billion (USD1.7 billion) from January 2015 to last December. As the CPA responsible for the company's auditing all those years, Ruihua is also under scrutiny, the China Securities Regulatory Commission said in a statement on its website on July 26.
    The Zhangjiagang, Jiangsu province-based firm is also suspected of bumping up its operating income through fictitious sales, exaggerated operating costs and fictional expenses on research, development and sales according to Yicai. If found guilty, the company and its controllers will be issued with the maximum penalty and will be banned for life from the stock market, the CSRC added.

    More at: https://www.zerohedge.com/news/2019-...as-ipos-halted
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  16. #224
    The media has largely bought into Huawei’s “strong” half-year results today, but there’s a major catch in the report: the company’s quarter-by-quarter smartphone growth was zero.
    The telecom equipment and smartphone giant announced on Tuesday that its revenue grew 23.2% to reach 401.3 billion yuan ($58.31 million) in the first half of 2019 despite all the trade restrictions the U.S. slapped on it. Huawei’s smartphone shipments recorded 118 million units in H1, up 24% year-over-year.
    What about quarterly growth? Huawei didn’t say, but some quick math can uncover what it’s hiding. The company clocked a strong 39% in revenue growth in the first quarter, implying that its overall H1 momentum was dragged down by Q2 performance.
    Huawei said its H1 revenue is up 23.2% year-on-year — but when you consider that Q1 revenue rose by 39%, Q2 must have been a real struggle…https://t.co/dFQo4gxEVbhttps://t.co/HABAQ6fmfK
    — Jon Russell (@jonrussell) July 30, 2019
    The firm shipped 59 million smartphones in the first quarter, which means the figure was also 59 million units in the second quarter. As tech journalist Alex Barredo pointed out in a tweet, Huawei’s Q2 smartphone shipments were historically stronger than Q1.
    Huawei smartphones Q2 sales were traditionally much more stronger than on Q1 (32.5% more on average).
    This year after Trump's veto it is 0%. That's quite the effect pic.twitter.com/x3dQlOePDA
    — Alex B �� (@somospostpc) July 30, 2019
    And although Huawei sold more handset units in China during Q2 (37.3 million) than Q1 (29.9 million) according to data from market research firm Canalys, the domestic increase was apparently not large enough to offset the decline in international markets. Indeed, Huawei’s founder and chief executive Ren Zhengfei himself predicted in June that the company’s overseas smartphone shipments would drop as much as 40%.


    Consumer products are just one slice of the behemoth’s business. Huawei’s enterprise segment is under attack, too, as small-town U.S. carriers look to cut ties with Huawei. The Trump administration has also been lobbying its western allies to stop purchasing Huawei’s 5G networking equipment.
    In other words, being on the U.S.’s entity list — a ban that prevents American companies from doing business with Huawei — is putting a real squeeze on the Chinese firm. Washington has given Huawei a reprieve that allows American entities to resume buying from and selling to Huawei, but the damage has been done. Ren said last month that all told, the U.S. ban would cost his company a staggering $30 billion loss in revenue.

    More at: https://techcrunch.com/2019/07/30/hu...uarterly-halt/
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment



  17. Remove this section of ads by registering.
  18. #225
    Despite record credit injections and endless easing, China's economic survey data goes from bad to worse.

    • While China Manufacturing PMI managed a de minimus gain from 49.4 to 49.7, it remains in contractionary territory for the 7th month in the last 9.
    • China Services PMI continued to slide, back to its lowest since 2018.

    Confirming global weakness seen in Japanese and European PMIs.

    In a seemingly desperate reach, Bloomberg notes that the stronger result (49.4 to 49.7) signaled some optimism is emerging in the Chinese economy in spite of lingering uncertainty over trade talks and domestic demand.
    PMI data improves as “the government’s tax cuts have helped improve growth slightly,” Yao Shaohua, economist at ABCI Securities Co. in Hong Kong
    Under the hood things are less rosy with Manufacturing New Orders and Employment both contracting...

    And Non-Manufacturing Employment is contracting...

    We are less enthusiastic as July has more working days than June, which could also have helped lift production.


    https://www.zerohedge.com/news/2019-...-hit-2019-lows
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  19. #226
    Hong Kong's gross domestic product (GDP) contracted by 0.3 percent in the second quarter of 2019 compared to the previous quarter, Reuters reported July 31. Although annualized GDP grew by 0.6 percent in the second quarter, this remains well below the expected 1.6 percent.

    More at: https://worldview.stratfor.com/situa...evious-quarter
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  20. #227


    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  21. #228
    China's generation Z, not unlike millennials in the U.S., are developing an ugly addiction to debt. This was highlighted in a recent Bloomberg piece that highlighted examples like one 23 year old Shanghai resident who found himself $1,500 in debt to a smartphone app.
    His spending habits are made possible buy Huabei, a credit card that's part of Alibaba's ecosystem. He routinely spent more than his sole source of income, which was his parents 8,000 yuan (~$1,200) monthly allowance. When fell under a pile of debt, he tried to borrow his way out of it and pay in installments. It didn't work, and his parents had to bail him out. Hubei charged him 0.05% per day, which is about 18.25% annualized.

    His story is typical for China's Generation Z. Born between the mid 90's and early 2000's, this generation has little income and "virtually no credit history". But that doesn't stop them from having access to banks, fintech startups and peer to peer lenders (in addition to other unregulated channels).
    Formal household borrowing is now 54% of GDP in the first quarter, rising more than 4% in a year.

    Unsecured lending is up 20% a year in China since 2008. Services like Hubei offer revolving lines of credit for between 500 and 50,000 yuan. Balances can be repaid in monthly installments, as well. Alibaba rivals like JD.com have similar products.
    Regulators have tried to crack down on peer to peer lending and the sector has shrunk to half of its peak size. Data showed that nearly 70% of peer to peer lenders were younger than 40.
    The worrying part is that loans on these platforms often aren't counted in official data. And one consulting firm says that the amount of consumer finance available through the internet will more than double, to 19 trillion yuan, by 2021.


    More at: https://www.zerohedge.com/news/2019-...essible-debt-0
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  22. #229
    China's offshore yuan just collapsed below 7/USD -- after the PBOC fixed the onshore yuan below 6.90 for the first time in 2019 -- the currency plunging a stunning 12 handles to its weakest on record against the dollar as countless stop losses were triggered and thousands of traders were margined out.
    “A break of 7 is quite shocking to the market, and close attention will be paid to how China would deal with this move,” says Tsutomu Soma, general manager of the investment trust and fixed-income securities at SBI Securities Co. in Tokyo in a phone interview
    This is the weakest offshore yuan has ever been against the dollar...

    Onshore Yuan also broke below 7.00...



    Kyle Bass suggests the capital exodus has only just begun...
    GAMETIME - CNH collapsing...HKD won’t be far behind. Mass Exodus of capital out of CNH and HKD. This collapse has just begun. #china #hk #bankingandcurrencycollapse pic.twitter.com/MQ8jpnSeQb
    — Kyle Bass (@Jkylebass) August 5, 2019
    Gold in yuan is accelerating higher...

    Additionally, Bitcoin is well bid...


    More at: https://www.zerohedge.com/news/2019-...usd-record-low
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  23. #230
    Following the plunge in the yuan overnight, The U.S. Treasury Department on Monday designated China as currency manipulator, a historic move that no White House had exercised since the Clinton administration.
    “Secretary Mnuchin, under the auspices of President Trump, has today determined that China is a Currency Manipulator,” the Treasury Department said in a release.
    “As a result of this determination, Secretary Mnuchin will engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest actions.” "
    "This pattern of actions is also a violation of China’s G20 commitments to refrain from competitive devaluation."
    Washington hasn’t labeled a major trade partner a currency manipulator since 1994.
    The Yuan tumbled further on the headline...



    More at: https://www.zerohedge.com/news/2019-...cy-manipulator
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  24. #231
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  25. #232
    https://twitter.com/Jkylebass/status...49412621529088

    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment



  26. Remove this section of ads by registering.
  27. #233
    Earlier today, in addition to the chaos surrounding the escalation of the US-China trade and currency war, we also got news which slipped under the radar that the CEO of HSBC, one which with $2.6 trillion in assets is the largest UK bank and the 6th largest bank in the world by assets, was unexpectedly quitting and his departure would also lead to mass layoffs, with the bank set to fire 4,000 workers, or about 2% of its workforce.
    And while today's market massacre succeeded in sweeping the HSBC news under the rug, one can't help but wonder: is HSBC, which has had almost as many run-ins with the law as one particular infamous German bank, going to be the next Deutsche Bank?
    For the answer we went to one of our blogging friends who runs the Strategic Macro blog, and who conveniently took a look at some of the cockroaches in HSBC's basement. What he found was troubling, especially in light of the ongoing turmoil in Hong Kong which at any given moment is just a few minutes away and a false flag provocation away from a Chinese invasion.
    Courtesy of the Strategic Macro blog, we present:
    HSBC's exposure to Hong Kong real estate
    So conventional wisdom is that post-Basel III the banks hold a lot of capital against loans and are run conservatively. And in a normalised market this is very true I think.
    However when you are calculating LTVs and RWAs and PDs against bubble valuation levels, are they still appropriate? If you calculated it against replacement costs, the LTVs would go through the roof, and so would RWAs and the banks would be left with an CET tier 1 equity deficit to be covered by a rights issue. Any losses and higher RWAs on impaired loans would further cost equity.
    So Hong Kong real estate which yields 1-2% rental yields in many cases, vs a Prime lending rate which is 5.15% is an enormous, negatively carrying bubble, propped up by speculation and Chinese capital flows.
    HSBC is the 800lb gorilla in a banking system where M£ is >5x GDP.
    M3 and Household debt to GDP:




    More at: https://www.zerohedge.com/news/2019-...h-largest-bank
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  28. #234
    Hedge fund manager J. Kyle Bass, the CIO of Hayman Capital Management, says that China could face a problem that's three to four times bigger than the 2008 subprime crisis if the global economy enters a recession.
    Bass, who gained notoriety for correctly betting against the U.S. subprime crisis, has been vocal about what he views as China's "recklessly built" banking system. In a 2016 investor letter, he highlighted Chinese banks’ pursuit of excess leverage, regulatory arbitrage, and irresponsible risk-taking.
    In an interview with Yahoo Finance, Bass drew comparisons between the 2008 crisis, and what might happen if world’s second-largest economy hits a rough patch — which may happen as the U.S-China trade war escalates.
    "In our crisis, we had $17 trillion worth of assets on balance sheet in our banks, and if you include non-banks, like Fannie and Freddie, let's say we had $23 trillion,” Bass said on Monday.
    “We lost about $850 billion of equity in our banking system in our financial crisis. China has $53 trillion worth of [yuan] of assets in their bank, and their economy is only $13 [trillion],” he estimated.
    “I mean, guys, we lost less than $1 trillion,” the investor added. “I think they're going to lose $3 to $4 trillion if they have a crisis.”

    More at: https://finance.yahoo.com/news/kyle-...030801392.html
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  29. #235
    The worse China is doing, the more desperate they will get. Anything is on the table now.

    Xi knows this is the CCP's last stand so they're doubling down on literally everything, probably why he ended term limits, this is going to be a drawn out war against the West. At least he had the foresight.

    I wonder what the odds are of the CCP throwing him out for this disaster.
    How to plug a TWEET in post [ TWEET] [/TWEET ]

  30. #236
    Something to keep in mind regarding China's debt bubble v the US's debt bubble:

    China used their debt to finance the creation of productive capacity, while the US used their debt to finance consumption.

    Much of China's production structure is malinvestment, of course, but it can still produce something.

    Even presently useless, productive capacity might be retooled, if the capital isn't too specific.

    In contrast, in the US, it's certain that there's going to be no production forthcoming from food already eaten, vacations already taken, etc.
    "Democracy is the theory that the common people know what they want, and deserve to get it good and hard."

    -H. L. Mencken

  31. #237
    Quote Originally Posted by r3volution 3.0 View Post
    Something to keep in mind regarding China's debt bubble v the US's debt bubble:

    China used their debt to finance the creation of productive capacity, while the US used their debt to finance consumption.

    Much of China's production structure is malinvestment, of course, but it can still produce something.

    Even presently useless, productive capacity might be retooled, if the capital isn't too specific.

    In contrast, in the US, it's certain that there's going to be no production forthcoming from food already eaten, vacations already taken, etc.
    Most of what China has invested in is crumbling ghost cities that are too dangerous to live in and the rest of what they built will probably be destroyed in civil wars after they collapse or in wars with the neighbors who they have made hate them who will pounce when they are weak.

    America is in bad shape but China is in much worse shape.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  32. #238
    Quote Originally Posted by Swordsmyth View Post
    Most of what China has invested in is crumbling ghost cities that are too dangerous to live in and the rest of what they built will probably be destroyed in civil wars after they collapse or in wars with the neighbors who they have made hate them who will pounce when they are weak.

    America is in bad shape but China is in much worse shape.
    Much of what they built is malinvestment, as I said, but what they built is still capable of producing things of value (to repay debt).

    For instance, it's thought that China's coal industry is about 20% larger than it ought to be.

    Well that's a result of the same kind of idiotic policy that we pursue here.

    The difference is that the labor, tractors (?), whatever capital is involved in coal mining can probably be used for something else.

    It's going to be inefficient compared to whatever would have obtained had factors been allocated by the market, but...

    ...it's better than literally nothing, which is what the US has as a result of most of this debt.

    What's the productivity of a vacation to the DR last year?

    zero (0)

    The main advantage of the US is its exorbitant privilege

    ...which has allowed it to leach the production of the world for half a century to finance McMansions etc.
    "Democracy is the theory that the common people know what they want, and deserve to get it good and hard."

    -H. L. Mencken

  33. #239
    It’s never easy to gauge what exactly is happening in China, or why the CCP Politburo takes the decisions it does. Today, or overnight, is no exception to that. However, one thing that appears certain, but which I don’t see reflected in all the analyses, is that Beijing pushing the value of the renminbi (yuan) down below 7 to the USD in one fell swoop, is a major setback for Xi Jinping and his government.
    Yes, China may have given up hope of reaching positive conclusions in its trade talks with the US. And yes, some may think, even in China itself, that devaluing the currency is a tool that can be useful in a potential currency war. But there’s another side to this coin. It’s not even about the value itself, or the change in it, it’s the heavy-handed way it’s executed.

    China wants, and desperately needs too, for the yuan to be a force in global financial markets. In very simple terms this is true because if it then wants to buy something, it can simply print the money for it. But only about 1% of global trade today is executed in yuan. That is not nearly enough. It means China needs dollars and euros, all the time. And devaluing the yuan means the country needs even more of those.
    You’d almost think: why would you want to do that? What are the long-term prospects for a move like this? You’re telling forex markets that the value of the yuan is not trustworthy, because if Xi or the PBOC decides in the next five minutes that it should go up or down by 10% or 20%, they can do it. The Fed and ECB also have tools to manipulate their currencies (re: interest rates), but none of that magnitude.
    The crux of the dilemma probably lies in the Belt and Road Initiative (BRI), which I’ve been saying for years is just China’s way to sell its overcapacity and overproduction abroad. Sure, there may be loftier goals, and surely in the glitzy brochures, but the fact remains that China has tried to be an economic miracle, doing in 10 years what took the US a century, and it never slowed down its growth, at least not voluntarily, even if that might have been a wise move.
    Already lately, purchases by Chinese citizens and companies of real estate and businesses abroad have been curtailed, and not a little bit, by Beijing. There’s no better way to convince Chinese people of the miracle’s success than to let them travel the world and spend there, but that, too, may well soon be cut. It kills foreign reserves.
    If Beijing could charge participating countries in the Belt and Road Initiative in yuan, and they could pay for the overcapacity’s steel and cement and what not in yuan, that could be a game-changing program for the entire planet. But these countries have no reason to hold yuan, other than the BRI itself. And they, too, were watching the overnight move above 7 and must have thought: let’s be careful now.
    And to top it all off, China right now needs for these countries to pay in dollars instead of yuan, because its foreign reserves are shrinking so fast. It’s Catch-22 all the way down. China’s need for dollars goes against everything BRI stands for.

    Could the move hurt the US as well? Absolutely. But the long-term view behind the tariffs, and the talks China appears to have lost faith in, is to move the US away from its near all-encompassing addiction to Chinese production, and to move at least some of that production back home. Problem of course is, that is precisely what China’s miracle growth has been built on.
    If the US starts bringing production home, who is Beijing going to sell its (over-)production to? Yes, I hear you, to the BRI countries. But there it runs into the currency problems mentioned before. To Europe? The top of that trade route is also behind us. Europe will have to follow the US to an extent, and also bring factories back to the continent (and not just to Germany either).
    China could perhaps sell more than it does today to Russia. But that country still does produce a lot of things, and has been forced to be much more self-sufficient due to US and EU sanctions. It’s also a mighty small market compared to 350 million North Americans and 500 million Europeans, who are on average much richer than your average Russian to boot.
    There is a way for China to make the yuan more important in global trade (but devaluation is definitely not that way): Beijing could let go of its central and total control over the value of its currency, and let forex markets figure it out. That would give traders -and everyone else- faith in the value. Problem with that is, this is not how central control communist governments think.

    Beijing wants both: central total control AND a prominent place in world trade. And it may take them a long time to figure out that is not going to happen, unless of course they first conquer the entire world militarily. That is not an option, at least not for the foreseeable future. Come see me next century.


    More at: https://www.zerohedge.com/news/2019-...retreat-itself
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  34. #240
    PBOC fixed the yuan weaker than expected but just firmer than the critical 7.00 level. The fixing was seen at 6.9977, according to the average projection of 22 traders and analysts surveyed by Bloomberg, but PBOC weakened the fixing by 0.45% to 6.9996 per dollar.
    Offshore yuan slipped lower on the fix...



    More at: https://www.zerohedge.com/news/2019-...ahead-yuan-fix
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment



  35. Remove this section of ads by registering.
Page 8 of 9 FirstFirst ... 6789 LastLast


Similar Threads

  1. Astrology: Charting the Rise of Ron Paul
    By Kuldebar in forum Grassroots Central
    Replies: 226
    Last Post: 11-16-2012, 10:02 AM
  2. PMs: Charting JP Morgan's Historical Holdings of the Silver ETF
    By bobbyw24 in forum Economy & Markets
    Replies: 0
    Last Post: 05-10-2011, 06:18 AM
  3. Charting flip flops on tonights debate.
    By BamaFanNKy in forum Rand Paul Forum
    Replies: 3
    Last Post: 10-25-2010, 08:13 PM
  4. Charting software
    By kaberUSA in forum Economy & Markets
    Replies: 0
    Last Post: 11-19-2008, 04:52 PM
  5. National Ledger 7/19 - Charting the Rise of Ron Paul
    By propanes in forum Grassroots Central
    Replies: 0
    Last Post: 07-19-2007, 09:35 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •