The Asian Crisis

[Aman A.K.A. Ahamburger]

This thread

at the intersection of debt and war, we are. Stay

Beijing Takes Over Anbang, Insurer That Owns Waldorf Astoria

[Aman A.K.A. Ahamburger]

-Amid liquidity concerns, China's HNA Group aviation fuel bill hits $476 million - sources
-China's HNA Group plans to sell stake in Park Hotels: filing
-Chinese giant HNA to axe 100,000 jobs
-Why Beijing should let HNA fail
-HNA turns to private equity for funding with share pledge

[Aman A.K.A. Ahamburger]

But, they are growing at 6.5%!!

China Inc. Feels Heat From $668 Billion Puttable Bond Cooker

It seemed like a good idea at the time, but now an incentive that helped sell $668 billion of corporate bonds to Chinese investors is coming back to haunt borrowers.

They’re embedded put options, a feature that lets debt holders demand repayment, typically after interest rates rise. With borrowing costs ticking higher amid Beijing’s squeeze on debt, one company has already defaulted this month after investors requested they be paid back early. Ratings companies are warning there’s more to come with China accounting for about 69 percent of all the puttable notes worldwide, according to data compiled by Bloomberg.

[Aman A.K.A. Ahamburger]

An article from Captain Obvious here. Considering they have been distorting their growth with debt since the end of 2013, which is now manifestating in fire sales... Stay

China’s Economic Numbers Have a Credibility Problem

Suspicions that the country is cooking the books persist despite a government crackdown on cheating cadres.

[Aman A.K.A. Ahamburger]

Fire slaes and defaults that is! At least 20 corporate bond defaults have occurred in China so far this year.. What started as fear of China's debt wall, has now turned into Fears debt crisis could spread through emerging economies. No worries though, it is believed that printing money will make it all go away. China central bank injects net 203.5 billion yuan with hefty one-year MLF rollover.

[Aman A.K.A. Ahamburger]

As previously mentioned earlier in this thread: The Final Stage: China Copies U.S. Housing Bubble Policies

[Aman A.K.A. Ahamburger]

Yes, trade war fears is why Shanghai is now in it's third bear market in four years..

-China is in Trouble
-Why China Can’t Fix Its Housing Bubble
-China to Unleash $108 Billion in Reserve Cut for Some Banks
-Bear Market in Stocks, Weak Yuan Show China Problems Piling Up

[Aman A.K.A. Ahamburger]

China Think Tank Warns of Potential ‘Financial Panic’ in Leaked Note

[Aman A.K.A. Ahamburger]

And then... China Set for Record Defaults, and Downgrades Tip More Pain

[Aman A.K.A. Ahamburger]

When the state backing you is broke: Default reignites questions over China group’s state backing

Considering how the Chinese government and central bank have both - basically - said their is a financial crisis on the horizon, State backing shouldn't even be in question. Especially once you factor in what has happened the last 10 months; ie)

-Vulture fund seizes control of AC Milan after Chinese owner defaults
-HNA Group, one of China’s biggest global asset buyers since 2012, has been selling assets to repay borrowings, under pressure from regulators and creditors

Stay

[Aman A.K.A. Ahamburger]

A black hole of debt.... Now, where have I heard that before?

Caught in China’s cash crunch: why private companies are collapsing into a black hole of shadowy debt

And how true it is, and it ensnares all of Asia:

China Borrower's $11 Billion Debt Pile Comes Crashing Down

"China’s economic growth was largely driven by debt and its corporate debt looks like a Ponzi scheme,” said Qin Han, chief fixed income analyst at Guotai Junan Securities Co. “More firms may give up on repaying debt if they encounter financing difficulties"...

..."Companies that were used to paying back old debt with newly borrowed money have little experience in dealing with a change of cycles, and they don’t have other alternative plans,” said Ivan Chung, head of greater China credit and analysis at Moody’s Investors Service. “Borrowers’ inability to get new financing makes it difficult to hide problems.”

[Aman A.K.A. Ahamburger]

By 1989 Japan Inc. was on a buying spree; five years later, bust. The salt in the black hole of debt wound (how about all the liquidity injections?; good thing they kept their market going in 2015 and didn't let the market correct like in 2008).. Japan Inc didn't have a belt & road they were trying to fund, and they hadn't entangled as much of the world in their debt trap as China has; not even close. Stay

-Chinese Reversing Big U.S. Real Estate Buying Spree That Had Helped Boost Prices
-In China's debt-laden Xiamen, real estate boom chokes consumption

[Aman A.K.A. Ahamburger]

Japan Inc didn't have a belt & road they were trying to fund, and they hadn't entangled as much of the world in their debt trap as China has; not even close. Stay

Pakistan’s Bailout Is Really China’s

Pakistan's debt crisis isn't the result of an economic shock. It's the result of reckless Chinese lending. Any new aid package will only worsen the risk of similar problems arising elsewhere.

Under its Belt and Road Initiative, China extends lavish loans to support infrastructure projects overseas. The catch is that these deals typically require that the money be spent on Chinese goods, services, and labor, and the repayment terms are generally opaque and often onerous...

....Belt and Road projects are so risky because their rationale is political, not economic. Enshrined in the Communist Party constitution in 2017, the program is a cornerstone of China's plans to expand its influence and soft power globally. Most Belt and Road lending is channeled through state-owned policy banks that are more concerned with advancing foreign-policy goals -- such as winning over new allies -- than with turning a profit.

One result is that credit is often extended with little regard for financial viability or international lending standards. This helps explain why so many of the early Belt and Road recipients have ended up in financial distress. As China expands the program around the world, other projects will almost certainly end in tears. (Laotian high-speed rail comes to mind.)

[Aman A.K.A. Ahamburger]

One of the funniest things about this threads topic; how after President Trump's election, China was on the track to be the bastion of green energy, free trade, etc etc... Sad, pathetic, short term Communism is.



-Handling of U.S. trade dispute causes rift in Chinese leadership: sources
-China bans Winnie the Pooh film after comparisons to President Xi

[Aman A.K.A. Ahamburger]

I remember when it was the death of the dollar because China had a rating agency and they downgraded US debt... In rare move, China punishes ratings agency Dagong over violations.

When the official mouth piece of the CPC says being bearish on the economy is a good bet now; after multiple warnings from the government documented in this thread; I wouldn't say fear, but be aware what the Mujahideen Warrior Erogden is in the middle of.

I thought this was a great outline of how China wall of debt needs the new silk road; Soviet Collapse Echoes in China’s Belt and Road. While Afganistan was a big part in the Soviet fall, the wall of war China is going to have to fight through to get through is so much worse than Afganistan was for Russia. China's own partners in the road are fueling the fire; Pakistan’s ISI involved in Ghazni attack:

It's a good thing US Steel decided to ramp up steel production.

[tyfighter3]

LOL, Communism means ( Greed at the top for a few ) where Capitalism means ( Greed for Everyone that wants to partake ).  Looking back in History and present, I've only seen One that has worked. 

[Aman A.K.A. Ahamburger]

It's really interesting when you tune that specifically to the USA. The rotation at the top has ensured the survival of the structure, where other countries that have embraced capitalism have failed due to that command structure you speak of.

[Aman A.K.A. Ahamburger]

The fraud is unreal. I will always think about the big Short, every time. Fraud means time is limited; that was housing. This is literally the entire economy....

A new set of Chinese economic figures adds up to yet another headache for statisticians

comparing this year’s absolute yuan levels with last year’s, profits dropped by 15.92 per cent, according to calculations by the South China Morning Post.

Cumulatively, the profits grew 17.1 per cent year on year in the first seven months, according to the official data, but fell 8.1 per cent in absolute terms.

Based on calculations by the Post, the provinces and regions that inflated their industrial profit data by more than 30 per cent last year include Tianjin, Hebei, Inner Mongolia, Jilin, Jiangxi, Shandong, and Guangxi.

The result is not surprising because some of those provinces in question had already been exposed for forging data. For example, the Binhai New Area, an economic zone in Tianjin, was exposed for having inflated its 2016 GDP growth by a third.

[Aman A.K.A. Ahamburger]

Mar 17, 2013 13:04:39 GMT -5 Aman A.K.A. Ahamburger said:

  As on offshoot of the 2013 debt wall thread, I think it's important to focus a bit more on the situation that is developing in Asia.  As most are focused on Europe or the US, the fact is that Asian banks are now more leverage than they were in 1997 when the banking crisis hit the region.

China's 'Silk Road' project runs into debt jam... Jammed into a wall of war (crossover story) China is helping Afghanistan set up mountain brigade to fight terrorism (The war-torn Central Asian country has become increasingly important for China’s own security, as well as President Xi Jinping’s “Belt and Road Initiative”, a huge trade and infrastructure plan)

Stay

[Aman A.K.A. Ahamburger]

I see from a thread VB started on HNA liquidation that, unless you have been paying close attention to the data points, the following article is spot on: The new fear for stock investors is an emerging-market meltdown

[Aman A.K.A. Ahamburger]

Luv it! My calculations were spot on way back when; watch out for 2013, and by 2015 things will be much different.(Not the US that's in trouble, it's China.) The only factor I didn't have in the equation was China's willingness to BS to global markets with phony data.

You can go on for a long time, soon or later God's gonna cut you down.

Chinese Money Math

What has changed in China? Many if not most in the West haven’t yet caught on because they can’t conceive of where all this might be heading. One literal change was the appointment of Yi Gang as head of the People’s Bank of China. Not only did he replace longtime chief Zhou Xiaochuan, Yi’s elevation broke an even lengthier unwritten Communist rule.

Officials with overseas experience aren’t given the top spot in key government divisions. The PBOC certainly counts as one of those. Yet, Yi was appointed, and confirmed, anyway despite his lengthy American sojourn....

...When China was confronted by the “unexpected” fallout from the “rising dollar” in 2015, it was Yi Gang who often represented his country on the world stage...

...Don’t worry, China still has pretty much middle to high growth in the near future.
Oh boy. Whether he actually believed it, or whether he was pitching the government’s “nothing to see here” official position, is also a matter for debate. What wasn’t was the PBOC’s often desperate struggles that year (and those that would follow).

It got so bad that bank reserves were allowed to contract – sharply. Not only that, perhaps the greater monetary sin, the PBOC even let currency growth slow down to almost nothing. I’m not talking about the virtual currency of something like the eurodollar, a credit-driven figment of global banking imagination. Real currency growth in China dwindled. No wonder China’s economy fell into a nightmare with Western Economists shocked into thoughts of a “hard landing.”...

....Ever since 2013, things have been going the wrong way in China, as I wrote in March 2014 (above). The PBOC has attempted to address this single deficiency in various ways over the nearly five years since then, including RMB “printing” in 2017.

All that accomplished was to prove there is no “middle to high growth in the near future.” Forget the myth of rebalancing, so long as the global system remains stuck without meaningful recovery and growth there is nothing China can do about it. Globally synchronized growth was as fake as 2015 models suggesting monetary contraction would be easily handled by China’s economy...

..This is a hard conclusion for many in the West (and in China, I suppose) to reach. They’ve been taught the technocracy from the very beginning. Give technocrats full autonomy, as they have in China, and watch all the good things they will accomplish.

This is why each and every struggle especially on the part of the PBOC is characterized as if it was done on purpose....

...The powerful central bank doesn’t appear all that powerful, rather judging by what’s really going on in all facets of China money central bankers in 2018 once again appear to be desperate. Like 2015 desperate. Because of their models, this isn’t actually different.

[Aman A.K.A. Ahamburger]

Now that the massive fraud which is the Chinese economy has been exposed; China Censors Bad Economic News Amid Signs of Slower Growth... Honestly, couldn't make this stuff up if you tried... While Rickards has a terrible record of calling for crashes; the fact war and debt are continuing to creep up in the same vein more and more, well... Stay

-What is not understood is how these two bilateral confrontations are intimately linked in a three-way tangle that could throw the global economy into complete turmoil and possibly escalate into war

[Aman A.K.A. Ahamburger]

Missed this one back in August: Chinese regional investment arm in landmark bond default.

And then:

-China cut reserve ratios for some banks
-China's Sept FX reserves fall more than expected to $3 trln
-China’s HNA defaults on Rmb300m owed to Hunan Trust
-Something Has to Break” as China’s Onshore Defaults Hit a New Record

Stay

[Aman A.K.A. Ahamburger]

Alternative China PMI Gauge Says Business `Has Never Been Worse

An indicator produced by a Beijing-based business school in the style of the closely-watched purchasing managers index plunged last month, adding to concerns about the slowing economy and raising the question of whether business conditions may be worse than official statistics show....

....The index is based on a survey of CKGSB students and graduates who are executives at companies operating in China. The respondents represent around 300 privately-owned small and mid-sized enterprises across several sectors of the economy.....

...Li Wei, the economics professor at CKGSB who oversees the survey, said in a commentary accompanying the September survey results. "For most, business has never been worse."

[tyfighter3]

I don't think it will be too long before China comes to the Trade Table with the US in a meaningful way.

[Aman A.K.A. Ahamburger]

Thing is, trade deficit with China has increased these past couple months. Me thinks the rhetoric about President Trump's trade policies causing economic pain for the Chinese makes for good "news". Fact is my friend, we know it's all about that tightrope; how that black hole of debt and lying about economic strength has always been the underlying issue.

[tyfighter3]

Yes my friend, but you know as I do that they can't hide it forever. I think we are getting closer to that day the Veil comes off. I hope our Market doesn't have to tank to much in the process  but the Worlds Markets will be toast along with Chin's JMO Theirs one thing I do know and that is our Kids will have the World at their feet if they have any Brains in them. lol

[Aman A.K.A. Ahamburger]

Going back and re-analyzing the data, what has become clear to me anyway, is that low rates due to a poor US economic recovery was the #1 reason China was able to keep that veil on you're talking about.

Now that the US economy has stepped up a notch and rates had to follow, all the BS built on debt is coming due; and the "emerging world" can't afford it.

What's interesting to note is how those higher rates are also putting a brake on things like auto purchasing. Mix that with a change in purchasing habits and a slower emerging market.. Well, it makes me laugh to see Ford try and blame tarrifs for their poor execution on this "global" chassis idea they put out there a few years back. Although, bring on the 2020 Bronco!!

Agree that, just as after WW2, we are going to rebuild; and this time it's the whole world that's involved, not just the west. Doing my best to set my boys off in the right direction anyway; located a 40,000 sq ft turn key greenhouse to convert into a WtE+Co2 utilization+Food production system(now the real work begins). Add in coal and we got the cleanest energy supply anywhere on the planet!

[tyfighter3]

Take the Co2 from coal to feed your plants?

[Aman A.K.A. Ahamburger]

Something I didn't fully appreciate when we were talking about it a couple years back was what about the fish??

I feel like I have jinxed myself talking about plans that "are a go" around these parts over the last couple years. We'll have to chat once I get a look at the books on this greenhouse. The guy was an MBA, him and his wife have ran if since '96 with a staff, and they are looking to retire. Can't imagine it's priced at much over 3x.

Oh, and we'll have to chat sometime about how the efficient market hypothesis seems to finally be coming to fruition, and how awesome it is that VectorVest has a robo trader!