The Asian Crisis

[Aman A.K.A. Ahamburger]

One has to wonder... 1%, really

The difficult balancing act of China's housing market

The property market is failing to attract the investment it needs, official data showed Tuesday. Annual property investment growth slowed to a record low of 1 percent in 2015, a sharp decrease from 10.5 percent posted for 2014.
New housing construction projects dropped 14 percent year on year, with new residential housing declining 14.6 percent.

Once a key driver of economic growth, the slowing property market and its glut of unsold properties are dragging on overall GDP growth.
Over 718.5 million square meters of commercial residential housing was for sale by the end of last year, enough to house over 20 million people. The housing inventory is reported to be much larger.

[Aman A.K.A. Ahamburger]

This guys gains are wild!

Trader Who Made 6,200% on China Futures Says Go Short or Get Out

Huang Weimin, the hedge fund manager whose Chinese stock-index futures wagers returned more than 6,200 percent last year, has some advice for investors in 2016: Sell your shares now, before it’s too late......

.....While he’s sticking with bearish futures bets to take advantage of further losses, he says the average Chinese stock investor would be better off shifting into cash.

[Aman A.K.A. Ahamburger]

While I am no fan of, Soros, the fact that he has China running scared makes me

It's like, ya China; you created a monumental mountain of debt then thought you could engineer your way out of it, but it's, Soros and other external forces that are the problem!

China warns Soros against ‘declaring war’ on its currency

[Aman A.K.A. Ahamburger]

Cause and effect..

China's Record Factory Gauge Slump Adds to a Policy Dilemma

China’s official factory gauge signaled a record sixth straight month of deterioration, raising the stakes for policy makers struggling to prop up the economy amid a second bear market in stocks since June and a currency at a five-year low.

The purchasing managers index dropped to a three-year low of 49.4 in January, the National Bureau of Statistics said Monday. That compared with a median estimate of 49.6 in a Bloomberg survey of economists. Numbers below 50 indicate conditions worsened. The official services index also fell, while a private PMI survey signaled the industry shrank an 11th month.

Euro-Area Factories Cut Prices as Deflation Risks Loom Large

Factories in the euro area slashed prices of goods by the most in a year in January, highlighting the deflationary risks that’s keeping alarm bells ringing at the European Central Bank.

In its monthly manufacturing report, Markit Economics said price pressures “remained on the downside” and output charges fell for a fifth month. In addition, all countries in its survey reported declines, the first time that’s happened in 11 months.

But, but the ECB pumped trillions of dollars into the economy... It's like the EU is drowning in debt, just like China.. At least China doesn't have millions of refugees to support

[Aman A.K.A. Ahamburger]

Jan 27, 2016 9:36:08 GMT -5 Aman A.K.A. Ahamburger said:

While I am no fan of, Soros, the fact that he has China running scared makes me

It's like, ya China; you created a monumental mountain of debt then thought you could engineer your way out of it, but it's, Soros and other external forces that are the problem!

China warns Soros against ‘declaring war’ on its currency

China's own version of 'The Big Short'

This column has examined China's $28 trillion problem, which relates to its post-Lehman Brothers credit explosion. A more immediate one is the roughly $23 billion of offshore debt rated just one small step away from junk by major credit-rating companies. The second-biggest economy has a devilish assortment of so-called fallen angels. Any sudden rash of downgrades could trigger the next bout of turmoil in global markets.


Hence the big Chinese short amongst global hedge funds. It's no coincidence that one of the stars of 2008, Kyle Bass of Hayman Capital Management, is now shorting the yuan, Hong Kong dollar and other Asian currencies. While Bass did less well with his bet against Japanese government bonds, he made $500 million from the U.S. subprime-mortgage crash. Another JGB shorter, Greenlight Capital's David Einhorn, is betting on a depreciating yuan.

These trades irk President Xi Jinping's government to no end, as recent attacks on George Soros indicate. Admittedly, it's a highly sensitive moment for Beijing. As Xi's team works to accelerate a transition to consumer-led growth and rein in a heavily-indebted financial system, the last thing it needs is speculative attention. Yet Bass, Einhorn and others are highlighting risks that could spill over into markets and gross domestic product trends around the world. The yuan is on the front lines of negative Chinese sentiment....

CHINA INC. IS THE BIGGEST ISSUER of international debt in Asia, with outstanding bonds approaching the $400 billion mark. Servicing those IOUs will become harder amid the slowest growth since the early 1990s and a currency experiencing downward pressure. Downgrades will make for some ugly headlines, reinforcing the narrative that a hard landing may be inevitable. That, in turn, would have Beijing accelerating sales of its $3.3 trillion of foreign-currency reserves to defend the yuan...

It's hardly surprising that traders who made fortunes betting against U.S. housing are shifting to an even bigger bubble. "When you talk about orders of magnitude, this is much larger than the subprime crisis," Bass told the Wall Street Journal recently,....

the whole point of "The Big Short" was that an iconoclastic few sometimes see what the herd doesn't.

Which is why a "A Short History of Financial Euphoria: John Kenneth Galbraith" continues to be reprinted to this very day. Stay

[Aman A.K.A. Ahamburger]

I'm to tired - ATM - to go back and find the first time it was mentioned on this thread that China had two choices: let it go now, or burn through their cash and have nothing left after the crash.(I think it was in 2014).

Well, proving once and for all that China isn't some kind of miracle, led by geniuses that put the west to shame; SocGen has released some crazy numbers.. Granted this analyst in the article below is usually bearish - so there's that, China.

SocGen claims China is only months away from burning through its currency reserves

that cushion is likely to evaporate soon on a combination of capital flight and the continuing effort by financial authorities to stem a dramatic drop in the currency....

....“We estimate that if capital outflows maintain their current pace, the PBoC would be unable to defend the yuan for more than two to three quarters,” Wei Yao, Société Générale’s China economist, said in a report published earlier this month.

“China’s reserves have already fallen by $663 billion from mid-2014, and a further decline of this scale would start to severely impair the Chinese authorities’ ability to control the currency and mitigate future balance of payments,” she said.....

.....Barclays, meanwhile, projected China’s reserves to have dropped by as much as $140 billion last month to $3.19 trillion — or more than Edwards has forecast. “If correct, this would be the biggest monthly drop in foreign exchange reserves on record,” said David Fernandez, an analyst at Barclays, in a note.

The PBOC is expected to report on the level of its currency reserves this weekend.

[Aman A.K.A. Ahamburger]

And then there were two... USA skeleton krew?? Stay

What the ‘Chart of Doom’ is saying about a global recession

a site devoted to charting economic indicators from around the world, shows credit dropping off in the U.K., Japan, and the eurozone while remaining expansionary in the U.S. and China.

.... much of the global economic rebound since the 2008 financial crisis is due to the rise in debt in China.

“In other words, the faltering global ‘recovery’ and all the tenuous asset bubbles around the world both depend on a continued hyper-velocity rocket rise in China’s private credit,” said Smith.

The Institute of International Finance estimated that China’s total debt stood at a record 277% of gross domestic product at the end of 2015.....

....Beijing announced on Sunday that the country’s foreign-exchange reserves fell by $99.469 billion to $3.231 trillion in January to the lowest level in more than three years.

It is the second-biggest drawdown in China’s reserves in history after a decline of $108 billion in December and suggests continued capital flight even as Chinese authorities intervene in the foreign-exchange market to cushion the yuan’s slide.

-Expectations for current quarter’s earnings are rapidly deteriorating
-Banking shares plummet on economic slowdown fears
-Why a selloff in European banks is ominous

[Aman A.K.A. Ahamburger]

I wondered how long it would be before this came up..

Kyle Bass warns China’s foreign cash reserves ‘below a critical level’

in a letter that his firm estimates that China’s liquid foreign reserves are $2.2 trillion at most.

Futher, from the same interview but a different perspective.. Those damn nonperforming loans that were mentioned throughout this thread last year.

Bass Says China Bank Losses May Top 400% of Subprime Crisis

Kyle Bass, the hedge fund manager who successfully bet against mortgages during the subprime crisis, said China’s banking system may see losses of more than four times those suffered by U.S. banks during the last crisis.

Should the Chinese banking system lose 10 percent of its assets because of nonperforming loans, the nation’s banks will see about $3.5 trillion in equity vanish, Bass, the founder of Dallas-based Hayman Capital Management, wrote in a letter to investors obtained by Bloomberg. The world’s second-biggest economy may end up having to print more than $10 trillion of yuan to recapitalize banks....

....“What we are witnessing is the resetting of the largest macro imbalance the world has ever seen,”

[Aman A.K.A. Ahamburger]

Spend those reserves, China!

China's exports slide 6.6% in January

China's exports fell 6.6% in January from a year earlier in yuan terms, ....

Imports in January fell 14.4% in yuan terms from a year earlier

This Is Why China’s Housing Market Is Such a Mess

Just a week before the Chinese New Year, China’s central bank cut the minimum mortgage down payment for first-time buyers from 25% to 20%, as it sought to shore up the property market. The new rules apply to all but a handful of cities—such as Beijing, Shanghai, Shenzhen, and Guangzhou—where demand remains strong.....

.....There are 13 million vacant homes in China, according to Reuters.....

.....In the city of Xi’an last year, a never-used 27-floor high-rise that covered 37,000 square meters was blown up and cleared away because it had been left vacant for too long and deteriorated beyond repair....

....Zoomlion, the country’s leading construction machinery and sanitation equipment maker, announced a 90% net profit drop in 2015. Fifteen Chinese real estate companies projected a loss for 2015 due to the recent market slowdown. Wanda Commercial Properties, whose founder was until recently China’s richest man, was downgraded last week by Standard and Poor’s to junk bond status....

......In recent years, tier 3 and 4 cities accounted for 80% to 90% of total new construction, an analyst at the Commonwealth Bank of Australia tells Business Insider. With state-owned banks indiscriminately channeling financial resources to property developers, other types of private enterprises and local businesses have been starved of capital. The Chinese government has long been adamant about transforming the nation from an investment-focused to a consumption-driven, technologically-advanced, knowledge-based economy. The current system encourages exactly the opposite.

For China’s middle class, a weakening economy is a mere inconvenience. For the 70 million people who live in abject poverty, a small contraction in living standards could be an utter disaster—enough to trigger social unrest. With overall GDP growth grinding to a record low of 6.9%, the Chinese government has had no choice but to inject more stimulus.This temporary tweak to avoid deeper shocks is needed without a doubt. But the urgency for broader economic reforms is needed even more.

So? On the plus side for China this war going global staves off massive social unrest due to the fact they will need hundreds of millions of troops?? China Sacs Russia because, Putin screwed up their plans for expansion where the war has spread to? Stay

[Aman A.K.A. Ahamburger]

Almost like a slap in the face, just as,

China Bad-Loan Issue Not as Bad as Bass Makes Out, CICC Says

China’s bad-loan problems are “not as serious as” Hayman Capital Management’s Kyle Bass claimed earlier this month, according to China International Capital Corp., the investment bank Morgan Stanley helped create in 1995.....

.....“Bass’s estimate could be too large” as it implies a true bad-loan ratio for China banks at 28 to 30 percent, Larry Hu, a Hong Kong-based China economist at Macquarie Securities Ltd., said in a research note on Monday.

The actual figure could be about 8.1 percent, the CICC analysts said. The official ratio as of December was 1.67 percent, the China Banking Regulatory Commission reported on Monday, as the industry’s soured loans climbed to 1.27 trillion yuan, the highest since June 2006.

China's Bad Loans Rise to Highest in a Decade as Economy Slows

Nonperforming loans jumped by 51% last year from end of 2014

[Aman A.K.A. Ahamburger]

This isn't the money you're looking for.

China’s central bank injects another 10 billion yuan into system

[Aman A.K.A. Ahamburger]

And the hits just keep on coming... Why Beijing Declared US Billionaire Investor George Soros an ‘Enemy of the Chinese People’

Why are they mad? Because he is right!

-China January inflation data shows deflationary pressure persists
-China Exporting Global Deflation? Deutsche Bank Says Not Quite

Not quite Global is what they mean to say. Just to Europe - where their economy is on its last legs of this bubble due to crisis after crisis - and to places like; Japan's Exports Drop Most Since 2009 as Sales to China Fall

But the US Skeleton Krew, now that is the not quite part.

[Aman A.K.A. Ahamburger]

I'm starting to think that prices in Shanghai and Beijing aren't actually rising either. We know they can't hide the fact that the 2nd through 4th their cities are dropping and in...

Hong Kong Developers Under Pressure to Cut Prices Amid Slowdown

Hong Kong’s developers are offering enticements from iPhones to wine coupons to counter the slowest home sales in at least 25 years, to no avail. Their options are now narrowing down to the one they’ve desperately sought to avoid: price cuts.

Stay

[Aman A.K.A. Ahamburger]

What reeks of desperation and dissent? China Bans Foreign Firms From Publishing Directly Online

Where do we see these graphs showing up?

Earliest Chinese Data Signal Slowdown Hasn't Bottomed Out Yet

We see them show up in all these places:

-HSBC reports net loss of $1.33 billion in Q4
-BHP Billiton slashes dividend, drops payout pledge
-EU Chamber urges China to reduce production
-German Business Sentiment Falls as Turmoil and China Sow Concern

Stay

[tyfighter3]

Kind of shows how that balance act is going that we have been talking about for years. LOL

[Aman A.K.A. Ahamburger]

LOL, no doubt! Consumers on one side, debt on the other. Then the blow hard, Putin comes along with his hot air; and he huffs, and he puffs the Chinese dream of a new silk road away - for the next while anyway.

[Aman A.K.A. Ahamburger]

An interesting pattern shows up when you take a step back from it all. It was 1845 when the Railway bubble peaked in England, the economic pain wasn't felt until two years later. The market tanked in 1929, but it wasn't until two years later that the economic pain started to set in. Hitler started his March in 1939, but it wasn't until two years later that WW2 broke out. The housing bubble peaked in 2006, but it wasn't until 2008 that the economy took a serious hit.

Currently, it was 2014 that, Putin invaded the Ukraine and we are just now seeing the effects of that going global(due to a 15 year conflict). Further, it was 2015 in which China's debt problem started to eat away at their banking system. Now that the war has gone global, and China's new silk road plans are screwed; one has to wonder what the end of year 2017 holds.

OECD sounds alarm over slowdown in policy changes

A slowdown in the implementation of policy changes by governments that are needed to boost long-term growth prospects is "deeply concerning," the Organization for Economic Cooperation and Development said in a report published as finance officials from the Group of 20 largest economies meet in Shanghai.

In its annual report on government efforts to revamp their economies, the OECD said progress in 2015 had slowed compared with the two previous years, and even more when compared with the years immediately after the financial crisis.

"Given the breadth and evolving nature of the growth and inclusiveness challenges facing advanced and emerging economies, the slowdown in the pace of structural reform documented in this report is deeply concerning, " said Catherine L. Mann, the OECD's chief economist.

One has to wonder if these are the reforms OECD was talking about.... Now, where have I seen this before??

-China Lowers Down-Payment Requirement for Home Buyers in Most Cities
-China Said to Agree $7.7 Billion of Bad Loan Securitization

Hey, OECD Japan has done NOTHING but put accommodative policy in place. How is that working out?

Japan’s inflation drops to zero in January

Stay all.

[Aman A.K.A. Ahamburger]

It was hard to rely on Chinese data in the past, they have just shown that it's impossible now because China silences outspoken real estate mogul on social media. Basically announcements from the Chinese Central Bank mixed with data from surrounding countries and trading partners tells the story, and it ain't pretty. Stay

-China cuts banks' reserve rules in policy switch
-Citigroup to sell its 20% stake in China Guangfa Bank
-Singapore Firms Going Out of Business in 'Ominous' Sign

eurozone inflation falls faster than expected

Consumer prices slid in Germany, France and Spain in the year to February, figures showed last Friday. In Germany, the EU-harmonised rate of inflation slowed to minus 0.2pc, compared with a prediction for no change in a Bloomberg survey. The rate dropped an annual 0.1pc in France, compared with a forecast of a 0.1pc rise. Spanish prices slid 0.9pc, compared with an estimated decline of 0.6pc.

[Aman A.K.A. Ahamburger]

#286&287... EOY 2017, stay .

-South Korea's exports shrink 12.2% in February
-China Credit Outlook Cut to Negative From Stable by Moody's
-China to lay off five to six million workers
-Death and Despair in China's Rustbelt

Whatever will all those laid off workers do? Oh ya, this WAR is going global!

More fractures developing in the European Union

[Aman A.K.A. Ahamburger]

The hits just keep on coming!

Moody’s Cuts Credit Outlook on Chinese SOEs, Financial Firms

[Aman A.K.A. Ahamburger]

What? China is trying to do everything then can to prop up their markets? China Said to Intervene in Stocks Ahead of Annual Policy Meeting

Then there is the reason - more than likely - that Moody's downgraded China..

China's Rebalancing Is Overrated

A closer look at the data, however, paints a different and decidedly gloomier picture. Take travel. While overall rail traffic is up, total passenger turnover, which accounts for the number of kilometers traveled, grew only 3.1 percent in 2015. Moreover, it’s important to remember that only 11 percent of trips are done by rail. (International air travel, which grew 34 percent last year, only covers 0.2 percent of trips.) The vast majority of travel takes place by road and highway traffic actually declined last year. If so many more Chinese are going on pleasure trips, why is hotel revenue flat?

Similarly, sales at the 100 biggest retailers in China, which one would expect to be thriving if the economy were rebalancing, were down 0.1 percent in 2015. Luxury brands have been hit particularly hard (in part because of the ongoing anti-corruption campaign) and sales of even basic consumer durables such as TVs, refrigerators, audio equipment and washing machines are flat or declining.

Services are certainly growing faster than manufacturing and real estate. But much of that growth comes from two sectors. The first, financial services, got a major boost in 2015 from the stock-market boom in the first half of the year and from the continuing flood of lending encouraged by the government. If one strips out the contribution made by the sector, consumption continued to slow last year.

The bursting of the equity bubble is sure to crimp growth, as may a souring of loans, many of which are going to loss-making heavy industries. Indeed, by helping keep afloat those state-owned zombie companies in order to boost GDP, Chinese banks are further delaying the process of rebalancing.

The other sector that’s done well is logistics and transportation -- mostly because of an explosion in e-commerce. Consumers are jumping at the lower prices and greater choices offered online; Alibaba, its competitors and downstream companies are expanding rapidly. Yet despite this new demand, the output and total sales of consumer goods are barely growing. That suggests online retailers are simply stealing market share rather than adding to the overall pie.

Keep in mind these earnings are probably inflated to a degree as well!

[Aman A.K.A. Ahamburger]

But, but, but, the B.I.S. was just saying that SOE were paying down debt!!

ChemChina $50 Billion Loans Flag New Chapter in China Debt Binge

SOEs have seen debt jump to 62 percent of assets from 55 percent in 2007, according to estimates from Shi Kang, an associate economics professor at the Chinese University of Hong Kong.
Chinese companies are “horrendously over-levered" and “not all of them are starting from a balance sheet that, under normal circumstances, would allow them to make such large acquisitions,” said Kalai Pillay, head of North Asia industrial ratings at Fitch Ratings in Singapore.

Since they are now completely clamping down on the internet, the Chinese Commies are taking it one step further: China Tries Its Hand at Pre-Crime. I'm sure in thier own minds they will make this a success too!

Oh, and Hong Kong Homes Sales Tumble 70% as Slowdown Intensifies... So I'm sure the property market is coming back on the main land..

[Aman A.K.A. Ahamburger]

The way of the future.

-China's exports tumble for 8th month in a row
-German Factory Orders Drop as Global Slowdown Weighs on Economy
-Germany local elections: Far-right groups make huge gains

[Aman A.K.A. Ahamburger]

It's the way of the future.

-China to ease commercial banks' bad debt burden via equity swaps - sources China Creates South China Sea Company
-South Sea Company

[Aman A.K.A. Ahamburger]

China-related bankruptcies spike in Japan

Heard in the Hutong: What Do Beijingers Think of the Housing Market?

The housing market is part of the bubble economy. In 5 years or so, after a war has broken out, then the middle class will be able to afford a home.

(As previously mentioned on threads in this forum, fight in the war, get a home.)

[Aman A.K.A. Ahamburger]

Spend and fudge! Spend and fudge!!

-China may swap ‘zombie’ companies for ‘zombie’ banks
-China regulators speed up bad-loan help for banks

Whatever will these workers do? It's the way of the future.

Chinese coal miners strike over wages, layoffs

[Aman A.K.A. Ahamburger]

Ah, the memories. For years the accusations of sunshine pumping made me ..

If I had only been position prior to 2009 I thought to myself...

The stories about China's domination and super power status were quoted, the continues drivel about the end of the USA was peddled - not unlike today. Even as The Great Stagnation proved to USA doomers wrong, they still chose to hold onto their broken clocks. "Just wait until the end of 2015" I would say, "things will be a lot different." "Ha," they laughed. "There is no way that the USA will make it until then, we - the armchair economists - know it to be true"..

Now, as we proceed towards 2020 and the world burns around North America the desperation of the USA doomers sets in, clinging so desperately to the notion that the USA is the most corrupt entity in this fucked up world. And when the dusts settles by 2027 - or there abouts - one has to wonder what will become of the USA doom and gloom. I guess it as has been written though, "take care of the poor, they will always be with us.

China Grapples With Job Cuts and Wage Gains as Congress Closes

[Aman A.K.A. Ahamburger]

On top of the South China Sea Company, securitization of loans... well, the debt, debt, debt... More debt!

-China's P2P Property Lending Growth Six Times Faster Than Banks
-Shadow Lending for Chinese Home Down Payments Prompts Crackdown

And then..... Job losses outside of utilities.... And then.... EARNINGS!!!

As China's consumers tighten belts, retailers cut jobs, offer discounts

Retailers in China are shedding staff, slowing expansion plans and seeing stocks pile up in warehouses as shoppers tighten their belts - a major headache for a country that has pinned its hopes on consumers to drive economic growth.

With that growth running at its slowest in a quarter of a century, China's consumption patterns are changing, with wealthy middle-class households trading down from up-market to more affordable brands, and poorer families paring back on even basic purchases.

China's top 50 retailers saw sales fall 6 percent at the start of the year, and sales of basic goods from noodles to detergent grew just 1.8 percent at the end of last year, down from over 9 percent just three years ago, according to Kantar Worldpanel data......

......Procter & Gamble (PG.N), whose China products include Pampers diapers and Tide laundry detergent, said in January its sales were "significantly down" compared with 2014. Infant formula maker Mead Johnson Nutrition Co (MJN.N) said price competition and a shift to smaller shops and online hit sales.

"We are seeing shifts within retail. High-end luxury goods have had a very good few years, but that's coming to an end. Tastes are changing," said Mark Williams, chief Asia economist at Capital Economics in London

[Aman A.K.A. Ahamburger]

Now that it's a known fact that this is the first time since the Asian crisis that U.S. monetary policy is as focused on the risks to global growth as it is on the domestic economy, it's time to analyze that..

Japanese asset price bubble

was an economic bubble in Japan from 1986 to 1991 in which real estate and stock market prices were greatly inflated.[1] The bubble was characterized by rapid acceleration of asset prices and overheated economic activity, as well as an uncontrolled money supply and credit expansion.[2] More specifically, over-confidence and speculation regarding asset and stock prices had been closely associated with excessive monetary easing policy at the time.[3]....

By August 1990, the Nikkei stock index had plummeted to half its peak by the time of the fifth monetary tightening by the Bank of Japan (BOJ).[2] By late 1991, asset prices began to fall. Even though asset prices had visibly collapsed by early 1992,[2] the economy's decline continued for more than a decade. This decline resulted in a huge accumulation of non-performing assets loans (NPL), causing difficulties for many financial institutions.

What's different this time around is that China's massive credit expansion was an attempt to balance out the biggest credit bust in history (2008). What's different this time is that a huge build up of NPL in China has happened in a matter of two years, not a decade. What's different this time is that a global war is breaking out. What's different this time is trillions and trillions and trillions of dollars have been printed in an attempt to get the global economy going and because of debt destroying it, and said war, what has appeared is a plateau...



So, had China been able to expand their silk road project, and had Europe not had a refugee crisis on top of their banking crisis, we would have been able to work our way out of the greatest credit Bubble in history(decades of work). But, what isn't different this time is the destructive nature of war, which makes this credit bubble the same as all the rest. Stay

China's Central Bank Chief Sounds Warning Over Rising Debt

[Aman A.K.A. Ahamburger]

"Moral Hazard" has to be the understatement of the century when talking about China's economic structure.

Government debt could bring China’s credit party to a halt