The Asian Crisis

[Aman A.K.A. Ahamburger]

Dec 9, 2016 22:00:31 GMT -5 Aman A.K.A. Ahamburger said:

Front and center, their is no way for China to cheat their way out of this. After a not seen in 20 year manover to stop capital outflows, China in now killing economic growth to stop flow that is cause by economic weakness that is causing capital outflows. The economic weakness is causing more pressure on debt, which is causing economic weapons and capital out flows. So, China has to keep using their reserves and stepping up capital controls........................

Oh, and there is no unrest in China, because everything out of China is censored and only a positive message is presented... *Cough* fake news...

It's weird to think the fire of war will actually be the thing China needs to truly progress.

-China forex reserves fall by US$320b in 2016
-China net 2016 outflows at record $725 billion: IIF

[Aman A.K.A. Ahamburger]

Asia's top banks warn that Chinese capital flight is becoming dangerous

China’s central bank is running out of ways to stem capital flight and faces a near impossible task trying to manage the fall-out from extreme credit growth, two of Asia’s most influential banks have warned.

“Defence of the currency by the People’s Bank (PBOC) is no longer a viable option,”  said Eric Robertson, the head of global macro strategy for Standard Chartered.

The Asia-focused lender said powerful forces are driving capital out of the country and the picture is fundamentally more disturbing than it was during last year’s devaluation panic. This is putting the PBOC in an invidious position as it attempts to deal with festering troubles in the banking system

[Aman A.K.A. Ahamburger]

I love the chart in the following article... As previously mentioned, China's mountain of FX reserves is nothing but a hill of beans compared with their debt explosion. Stay

China has now spent $1 trillion defending its currency

[Aman A.K.A. Ahamburger]

Now where have we seen this before

China’s Monetary Policy Is Looking Like Alphabet Soup

China’s monetary policy is looking increasingly like an alphabet soup, sowing volatility in markets. So far this year, the People’s Bank of China has boosted rates on three different liquidity facilities, created a new one, and ordered banks to cut lending. Its most high-profile tools -- the benchmark borrowing cost and reserve-requirement ratio -- have been left untouched.

[Aman A.K.A. Ahamburger]

this is absolutely absurd! Zombie, companies, cities, and provinces.

China’s Zombie Province Shows Trouble With Its Bond Market

Investing money outside of North America?

[Aman A.K.A. Ahamburger]

It's slowly sinking in at the top levels in, Beijing... "We are in a liquidity trap."

A Rare Beijing Acknowledgement: Weaning China Off Debt Is Hard to Do

even as the central government has made cutting debt a top economic priority in the past year, the economy’s overall leverage ratios are going up, not down....

...Data released Tuesday show total social financing, a broad measure of credit in the economy that includes both bank loans and nonbank financing, reached a record 3.74 trillion yuan ($545 billion) in January.....

....A driving force behind the persistent credit surge is China’s continued reliance on debt to fuel growth, which has led to an oversupply of unwanted goods and homes as well as a fast buildup of leverage.

At the economic conference Wednesday, some government advisers and economists acknowledged that the implementation of so-called supply-side reform—the term Beijing uses to describe its plan to cut overcapacity, debt and housing inventory—has been difficult in reality...

...In the past years, some researchers at the commission and elsewhere have urged China’s central bank to aggressively loosen monetary policy to help lower funding costs for Chinese businesses. But instead of loosening, the People’s Bank of China recently has shown a slight tightening bias in an effort to control asset bubbles as well as to steady the yuan.

At Wednesday’s conference, held at a historic Beijing guesthouse, Mr. Yang, former president of the Industrial & Commercial Bank of China Ltd., suggested that regulators set specific leverage ratios for state companies. In the event of those ratios being met or exceeded, he said, the government should consider injecting capital into the companies.

But such a strategy should only be applicable to viable companies as opposed to money-losing “zombie” firms, Mr. Yang said. “Doing so can force the reform of state-owned enterprises.”

In other words, command Economics has never, and will never be a long term strategy. Contrary to what "modern" economists think, China is not some mirical that the rest of the world will follow; they are just simply "the flavor of the month." A simple distraction from the plain old vanilla, Free Market Capitalism.

[Aman A.K.A. Ahamburger]

, but don't worry, it's just the one Province that has been cooking the books this bad.

Chinese province’s GDP fall hints at extent of past exaggeration

[tyfighter3]

2 years ago, I was saying that China was running about 3% not 7% and I might have been high then. lol

[Aman A.K.A. Ahamburger]

I remember that. My thoughts were that if they weren't growing at 8% they were actually in a recession because from past growth history we knew they needed that to keep the hundreds of millions of people growing. But an actual recession at that point already?

Explains that cash burn!!!! LOL...

[Aman A.K.A. Ahamburger]

Explains that cash burn!!!!

-China overtakes eurozone as world’s biggest bank system

“The massive size of China’s banking system is less a cause for celebration than a sign of an economy overly dependent on bank-financed investment, beset by inefficient resource allocation, and subject to enormous credit risks,” said Eswar Prasad, economist at Cornell University and former China head of the International Monetary Fund. 

Chinese bank assets hit $33tn at the end of 2016, versus $31tn for the eurozone, $16tn for the US and $7tn for Japan. The value of China’s banking system is more than 3.1 times the size of the country’s annual economic output, compared with 2.8 times for the eurozone and its banks

-China Shifts Stance, Letting Dying Firms Go Bankrupt
-China vows to strictly control local government debt quotas

Stay

[Aman A.K.A. Ahamburger]

The thing that has been true about all command economies is that they end up borrowing more and more to support their expansion. Their returns continue to diminish due to the money being commanded, not allowed to flow freely to places it needs to go.

Due to the overbearing nature of the command economies structure, citizens hide money, or start moving it elsewhere instead of investing it in local production.

Finally, due to the command structure citizens end up unhappy and restless due to inefficiency through the market place and eventually the command economy has to either train these unhappy "peasants" for war, or face on uprising at home.

This is all true of the current state of things in China; and further, the level of debt has gotten to the point where - as noted above - even the highest levels of commie central have had to admit it. While according to the central bank governor "everything is under control," it's hard to imagine this is the case when the overall banking system in China is twice the size of the USA's, and the economies are roughly the same size in GDP production.

Stay

China's debt 'too high,' must be controlled: Central bank governor

[verrip1]

Aman:

You've posted a lot about China and debt.  Do you know any comparisons between the reserves within Chinese banks vs. reserves in US banks?  Have the Chinese done any stress tests?  I'd look it up myself, but I'm too darned lazy.   

Investing money outside of North America?

Well ... that would be me.  For now.  I've got some India and some Brazil ETF. 

And I've got my eye on single country ETFs for Australia, Indonesia, Vietnam and South Korea.  {However, it is my bad eye.  }

[djAdvocate]

i like India quite a bit.

[Aman A.K.A. Ahamburger]

Mar 11, 2017 14:43:07 GMT -5 verrip1 said:

Aman:

You've posted a lot about China and debt.  Do you know any comparisons between the reserves within Chinese banks vs. reserves in US banks?  Have the Chinese done any stress tests?  I'd look it up myself, but I'm too darned lazy.   

Investing money outside of North America?

Well ... that would be me.  For now.  I've got some India and some Brazil ETF. 

And I've got my eye on single country ETFs for Australia, Indonesia, Vietnam and South Korea.  {However, it is my bad eye.  }

That's why I'm not worried about a bad ass like yourself Mr.V.

I'm concerned for the very large population of people out there that have money directed into international funds. Fools was a bit harsh eh?

Sorry, I guess I was off in saying the USA and China are roughly the same size. Was thinking it was a few years ago when China was about to takeover the USA, my bad... you know now that I think of it, in that time China has grown at 6.5% a year, and the USA has grown at not even 3% year.....

I'm sorry I know it's a cop out, but I don't trust the numbers out of China and there is ample evidence as to why. Since China's system has reached the size of Europe's, and this represents a 300% growth in about 7 years....

The Dicck Clark deal is falling apart apparently.

[Aman A.K.A. Ahamburger]

Feb 3, 2017 22:47:12 GMT -5 Aman A.K.A. Ahamburger said:

Dec 9, 2016 22:00:31 GMT -5 Aman A.K.A. Ahamburger said:

Front and center, their is no way for China to cheat their way out of this. After a not seen in 20 year manover to stop capital outflows, China in now killing economic growth to stop flow that is cause by economic weakness that is causing capital outflows. The economic weakness is causing more pressure on debt, which is causing economic weapons and capital out flows. So, China has to keep using their reserves and stepping up capital controls........................

Oh, and there is no unrest in China, because everything out of China is censored and only a positive message is presented... *Cough* fake news...

It's weird to think the fire of war will actually be the thing China needs to truly progress.

-China forex reserves fall by US$320b in 2016
-China net 2016 outflows at record $725 billion: IIF

-China Plans Stricter Bank Capital Rules to Contain Risks
-R&F’s Angola mine, Cambodia project snared by China’s capital controls
-More Abandoned Projects due to China’s Capital Control

[Aman A.K.A. Ahamburger]

This thread was started as an offshoot of another thread, "Debt Wall 2013: The Death of Socialism." With word of Default Fears Resurface Over Singapore's Looming Debt Wall, it would appear we have come full circle.

Which in my mind means that we are very close to this thread leading back into the larger issue of the Global debt Wall. China's FX reserves peaked in 2013, along with corporate earnings. In 2013 I was still being naive to Putin, so at that time I suspected we would be facing a long drawn out process of austerity limiting growth for 15 years, minimum. Due to the war this process is set to happen much quicker.

As mentioned earlier in this thread, since China has essentially shut down their press it's all about what's happening around them. Singapore above is a great example; especially as China's Capital Controls start Biting

Stay

[Aman A.K.A. Ahamburger]

-PBOC Said to Inject Funds After Missed Interbank Payments
-China Shadow Banks Hit by Record Premium for One-Week Cash

[bimetalaupt]

The last word I heard was Russia might take North Korea out with Nucks? What have you heard?

[Aman A.K.A. Ahamburger]

Nothing along those lines, but I know you have good info.. IBT says China wants the same... I think North Korea could end up nuking themselves based on their "test."

[Aman A.K.A. Ahamburger]

Classic.

OECD sounds the alarm on China's soaring corporate debt

figures indicate that instead of dialing back its credit-fueled growth, China has continued to rely on credit expansion as a means of meeting GDP growth targets. Over the past year, a good deal of this credit was injected into the state-owned sector....

....China is currently caught in the “middle income trap” describes the limits of using cheap labor and conversion of raw materials as a driver of growth.

First off, labor is no longer cheap in China, and the costs of inputs and raw materials have escalated, placing limits on the reliability of this as a driver of growth...

....While China has been leading the pack in filing patents, much of what has been patented is of little practical use or worthy of adoption. This state of affairs begs the question, can innovation be cultivated by governmental dictate or is innovation derived from a unique set of circumstances, both governmental and non-governmental? 

Critics of China’s model of innovation cite the absence of intellectual property protection, a rigid educational system that emphasizes rote memorization, the lack of internet access and free flow of information and the vetting of ideas that in some manner “offends” conformist political ideology as barriers to intellectual thought and the pursuit of innovation. 

[Aman A.K.A. Ahamburger]

While deals fall apart, and more GDP fuddging explained........China’s global currency ambitions falling flat with central banks. Japan 2.0 no doubt... But then there is what's on their doorstep.

Stay

[Aman A.K.A. Ahamburger]

Froud!

China Has Its Worst-Ever Start to a Year For Defaults

[Aman A.K.A. Ahamburger]

-China speeds up debt-for-equity program
-China Debt Risks Go Global Amid Record Junk Sales Abroad
-China’s Coming Debt Crisis
-Until it breaks: China debt risks exposed after 85pc fall in dairy firm’s stock price

[Aman A.K.A. Ahamburger]

They thought they could just keep fudging it.

China’s economic miracle is over

We suspect the truth is that China’s economy is growing less than 6.5% — if at all.

[Aman A.K.A. Ahamburger]

-The world's largest producer of aluminum is reportedly in jeopardy due to recent fraud allegations
-Investors in China’s $9 Trillion WMPs Unlikely to Get Bailout in Case of Default
-Forest city unit buyers who default, cancel sales and purchase agreement, to pay penalty

[Aman A.K.A. Ahamburger]

This is a great combo... China’s Minsheng Bank sees investor trust vanish – along with 3b yuan + China expands bad loan securitisation scheme to include more banks - state media...Mixed with the WMPs... The over leveraged housing markets... Losses racking up across the general trading markets...

[Aman A.K.A. Ahamburger]

China Markets Reel as $1.7 Trillion in Shadow Funds Unwinds

[Aman A.K.A. Ahamburger]

Synthetic... China's Hidden Debt Stirs Investor Angst as Defaults Rise

[Aman A.K.A. Ahamburger]

Three different angles, all saying the same thing...

-China debt rising at "alarming pace" : (Chinese) bank official
-We haven't heard JPMorgan CEO Jamie Dimon go this dark on China in a long time
-Hayman's Kyle Bass Sees Signs of Credit Crisis in China

[Aman A.K.A. Ahamburger]

All good in the neighborhood...

China finmin skips summit with Japan, Korea to attend emergency meeting