The Asian Crisis

[Aman A.K.A. Ahamburger]

TY, what was it that we talked about in regards to China again? Ah yes, China's Central Bank Balancing Act

[Aman A.K.A. Ahamburger]

Spin it how you want, numbers don't lie!

China November home prices fall at slower pace

On a year-over-year basis, the average price of new homes declined by 3.6% in November, compared with a 2.5% fall in October and 1.1% fall in September which was the first annual decline in nearly two years.

Excluding public housing, private-sector home prices fell in 68 of the 70 cities in November from a year earlier, up from the 67 cities that posted declines in October.

[bimetalaupt]

Dec 18, 2014 13:54:11 GMT -5 Aman A.K.A. Ahamburger said:

Spin it how you want, numbers don't lie!

China November home prices fall at slower pace

On a year-over-year basis, the average price of new homes declined by 3.6% in November, compared with a 2.5% fall in October and 1.1% fall in September which was the first annual decline in nearly two years.

Excluding public housing, private-sector home prices fell in 68 of the 70 cities in November from a year earlier, up from the 67 cities that posted declines in October.

A++++,

Well, It may be interesting to note the B1B have been reported leaving the base and headed West for the last hour.  Did Obama say we were not at WAR with the North Koreans? Well I wonder why the big birds are running up the big jets and sounds like headed WEST to somewhere in the EAST? Are we going to finish a Job that needs finishing!.

What does North Korea make?

Just a thought,

BiMetalAuPt

[Aman A.K.A. Ahamburger]

the ,

If NObama did say we aren't at war with North Korea... Well, you know that old saying about if a politician is talking...

That's some crazy info off the ground.. I guess we'll see what develops, if the big birds are in the air it won't be long before their presence is noted. I have been reading some outlandish stuff over the past week. Putin is apparently shipping weapons to Hezbollah - that's what Israel bombed a couple weeks back. Even more outlandish - yet still based on facts - MH370 in Kazakhstan as part of Russia's grand plan to provoke WORLD WAR III?

In other words, I'm not surprised that you're seeing movement.. I've got some other stuff to post, getting ready for this trip chewed up a lot of time over the last week. One thing I know for sure though - Sony giving into the demands of the hackers sets a dangerous precedent, one that speaks volumes to the dictators of the world.

God bless,



Why the shadow of WW1 and 1989 hangs over world events

[Aman A.K.A. Ahamburger]

Dec 2, 2014 22:34:46 GMT -5 Aman A.K.A. Ahamburger said:

This past year China's real estate market has mirrored 2007 in the USA - stay .

There are some great stats on Macau in this article... Oops, sorry about that. That was a report on Vegas in 2007-2008. These are the stats on Macau’s annual gambling revenue falls for first time

[bimetalaupt]

Jan 3, 2015 15:51:55 GMT -5 Aman A.K.A. Ahamburger said:

Dec 2, 2014 22:34:46 GMT -5 Aman A.K.A. Ahamburger said:

This past year China's real estate market has mirrored 2007 in the USA - stay .

There are some great stats on Macau in this article... Oops, sorry about that. That was a report on Vegas in 2007-2008. These are the stats on Macau’s annual gambling revenue falls for first time

A++++,

Just think about the food China ships to the USA.  Is it safe :if not the food in China is also not safe.  Look at the pigs and where they live.  The food produces a lot of food for the worms: pits for the pig to live in with worms to live on the predigested corn .  Now Russia is solving the air pollution problem the coal fired boilers caused. 

Also the China development into the 4th generation Nuke power: less waste with longer fuel cycle like the USN Ford: 50 years on a single original load.  Funny thing about NUKE is you can charge electric cars without adding CO2 to the air: whom speaks bad about  Nuke energy: tree huggers. 

Just a thought about the relationship of Russia to China who has a interesting bond with USA and USM,

BiMetalAuPt

[Aman A.K.A. Ahamburger]

,

Tree huggers=problem focusing....

You will have to go and show them how all those worms will help them rebuild.

Thor is stronger than Uri, maybe the US can ship uranium to China for processing?.. Won't need to come back.. I heard seafood was being processed in China and that they were talking about chicken. Talk about not wanting to eat chicken or seafood..

I fully agree that over the short term China is helping Russia. China wants Russian resources and is hoping Putin gives them up at a song. Let's not forget how armies from the east have controlled the land of Rus in the past.

Lets face it though; China is a capitalist in the closet and their coming out is going to be messy because of the control issues from the past. Make no mistake though, China won't be down and out and the dual hegemony on opposite ends of the world is balance.

-China Developer Kaisa’s Bonds Plunge After Loan Default
-China’s Cities Face Judgment Day on Debts as Costs Soar
-Say goodbye to 'made in China'
-Islamic State’s Activity spreads into the Far East

[Aman A.K.A. Ahamburger]

, I was thinking about how we were talking about China's Lehman/Bear Sterns moment last year. I realized, because China's property market is actually bigger that the USA's, the concept of the moment would be more like cracks in the glass.. Just as the cracks in the glass web out, so will the mountain of debt. Or I should say, it is webbing out.

Analysts fear China financial crisis as deflation looms

Chinese Developer Appears to Default

A default, if confirmed, would be the more shocking because it was so unexpected, investors say. Kaisa was seen as in good financial shape, with a healthy portfolio of commercial and residential projects, strong sales and solid cash flow that had made its bonds popular with investors. Kaisa’s net profit in the first half of 2014—the latest figures available—rose 30% versus the previous year to 1.33 billion yuan ($214 million), with revenue of 6.79 billion yuan. As of June 30, the 16-year-old company, which is listed on the Hong Kong exchange, had cash of 9.38 billion yuan versus short-term debt of 6 billion yuan.

But during the space of the past few months, the Shenzhen government has blocked approvals of Kaisa developments and property sales in the city, home to some of its major developments—actions the company said in a Dec. 21 statement could have “an adverse impact on cash flow.” Kaisa’s founder and long-time chairman, Kwok Ying Shing, has quit, along with a number of top executives and board members. Neither the government nor Kaisa executives have offered explanations.

On Jan. 1, the developer said it defaulted on a $51.6 million loan from HSBC Holdings PLC, and credit raters Standard & Poor’s and Moody’s Investors Service have downgraded Kaisa’s debt from just below investment grade to ratings that reflect an expected default. Kaisa’s bond prices have plunged more than 80% since the end of November, and are now trading at around 33 cents on the dollar. Its stock price has fallen more than 60% to 1.59 Hong Kong dollars over the same period.

Trading in the stock has been halted since Dec. 29.

Many Chinese property companies are heavily indebted, struggling with a weak housing market and difficulties in raising cash to pay back loans. Worries are mounting over the impact of China’s economic slowdown and the rising amount of debt among local government-connected financing vehicles, though recent government efforts to ease funding conditions have relieved some concerns. China has $55.7 billion in offshore property debt, according to Dealogic, a data-tracking company.

[Aman A.K.A. Ahamburger]

Why am I not surprised that the CPC isn't facing up to the societal problems create by the one child policy?

China property set for demographic hit

According to newly published research, the size of China’s main property-buying population — people aged 25 to 49 — will peak next year and then start to decline, just as a huge glut of new apartments hits the market.

This demographic will shrink drastically from 2018, with the number of urban homebuying Chinese falling much faster than contemporaries from the countryside, who are far less likely to have the means to buy expensive apartments, according to Ai Jingwei, an expert on Chinese real estate and author of the research.

The real estate sector has been the most important driver of growth in the world’s second-largest economy for most of the past decade, as house prices soared and construction of apartments mushroomed across the entire country.

Moody’s Analytics estimates the building, sale and outfitting of apartments accounted for 23 per cent of Chinese gross domestic product last year.

The long-term health of the property sector is still seen as crucial to maintaining the high growth rates to which China has become accustomed.

But after years of white-hot growth, Chinese property sales fell 10 per cent in the first 10 months of 2014 from a year earlier, prompting the steepest annual drop in nationwide prices in October since the data series began in 2011.

Still, the fall in volumes and prices has so far been relatively mild and developers across China have continued to expand their inventories, albeit at a slower pace, in the hopes of a recovery next year and beyond.

Most analysts argue this worsening oversupply is the biggest threat to China’s all-important property market.

“Developers are currently sitting on 5.6m units of unsold property, according to official statistics, a figure that has almost doubled in the space of two years,” says Mark Williams, economist at Capital Economics. “In reality the overhang is probably even larger.”

Mr Ai calculates that China probably now has more than seven years worth of unsold real estate inventory. But he argues that a shrinking pool of potential homebuyers is an even more worrying long-term challenge.

“From 2015 China’s house-buying demographic will start to shrink and the property market will undergo a structural shift in demand,” Mr Ai told the Financial Times. “We are actually likely to see a serious structural shortfall in purchasing power.”

He calculates the number of people in China in the 25 to 49 age group will peak next year at about 568m, before dropping to 543m in 2020 and falling below 500m by 2025, compared with 547m in 2010.

China’s official working-age population (people aged 15-59) peaked in 2012 and has shrunk by several million in each of the past two years, according to government statistics.

This demographic shift has been exacerbated by the one-child policy introduced in the late 1970s and early 1980s to control the country’s population.

The shift has already been manifested in tighter labour markets and higher wages in many sectors.

One of the more alarming revelations from Mr Ai’s research is the apparent correlation between a declining working-age population and the bursting of real estate bubbles in other countries in the past.

The most obvious and disturbing example from China’s perspective is that of Japan, which saw its working-age population peak in 1992, just one year after an enormous real estate bubble began to deflate.

In a sign of just how good things are going in China, Chinese developers start selling at a loss

[Aman A.K.A. Ahamburger]

At least sales rebounded a bit in Jan?

China debt party nears the end of road

China’s economy has got off to a slow start, with weak factory and service-sector readings. The typical response to such data is to expect more monetary stimulus. But have we reached the point where rate cuts are no longer able to lift China’s debt-heavy economy?

The secret to China’s exceptional financial stability is that the majority of both borrowers and lenders are in some way part of the state. Local-government financing vehicles and state-owned enterprises account for the lion’s share of debt in the system, while state-owned banks dominate lending. Even in shadow banking, such as trust finance, government entities still dominate.

The way China has developed its unique brand of state-capitalism means that much of the economy has avoided the judgment of the market by creating a situation where the market dynamics of risk discovery usually get suppressed. We see this in action when loans get rolled over or when there is some last minute bond rescue, often put together by the state.

But this system is now looking wobbly as Beijing acts to rein in local-government debt. On Jan. 5, local governments had to submit their final debt figures to Beijing, and the market is now braced for some scary numbers.

The situation of local governments has been made all the more precarious because they are so reliant on land sales for revenue, and the property market is slowing. More worryingly, SocGen notes that 40% of local-government debt relates to pledges on future land sales, making it all the more vulnerable to any fall in prices.

The big danger in all this is contagion or credit-risk unwinding in unexpected areas.

What is now different with China’s financial system compared during to the financial crisis of 2008 is that it’s no longer sealed from the outside world. The yuan USDCNY, +0.02% is increasingly circulating overseas, and Chinese corporations have sizeable dollar-denominated borrowings.

The day looks to be approaching when China will need to get used to growth without a pervasive “Beijing put.” Global markets should brace for this new normal.

[Aman A.K.A. Ahamburger]

Some of the top real estate developers in China left the building last year and started investing abroad - they're probably afraid of ghost..... cities.....

Proof once again - as if it were needed - that dictatorial command economies are a thing of the past thanks the American style business.

Free enterprise - we the people WIN! Thanks, JC.

Davos 2015: China property tycoon calls top of urbanisation drive

Zhang Xin, chief executive of Soho China, the property company, has called the top of China’s urbanisation drive.

“By now, most of the cities in China are built,” she said on the fringes of the World Economic Forum in Davos. “Even small towns are quite built. So I think the intense urbanisation has come to an end.”

Ms Zhang is sometimes called “the woman who built Beijing” because of her company’s extensive developments in the capital. She was talking on Wednesday at Credit Suisse’s Women of Impact Dinner, at which she was a guest of honour.

Ms Zhang was interviewed onstage by Stephanie Ruhle, the journalist and co-host of the dinner, who asked about China’s slowing growth rate. “With urbanisation coming to an end, it’s slowing down,” Ms Zhang said.

[Aman A.K.A. Ahamburger]

Moody's Analytics pointed it out about a month ago - as noted a couple posts back - and since China was apparently considering forcing people to have 2 kids a while back it would seem the rumors are true....

China's shrinking labor force

According to a report published by Beijing-based Founder Securities in early January, China is expected to post negative growth in its working population aged between 20 and 64 beginning this year.

Citing the example of Japan and several European countries, Su Jian, chief economic researcher at Founder, said an economic crisis usually takes place at such demographic turning points.

The property market will be the first to see the effects of the negative growth with prices posting sharp declines, Su said.

Following double-digit growth in property prices in six major cities since 1985, Japan saw the burst of its housing bubble after negative growth hit its working population.

Statistics in China show negative growth in the population since 2012 for child-bearing age women between 15 and 49 as well as for the overall population between the ages of 20 and 29.

[Aman A.K.A. Ahamburger]

China New-Home Prices Swing to Decline in February, which has lead to the PBOC to drop interest rates, yet again - like the last one did so much...

The problem is of course - ghost cities! As a top Chinese developer has already stated, China's urbanization is done.

China’s property problem is worse than it seems

China’s real problem is that new construction is evaporating no matter what sales and prices do. That means the knock-on effects of additional stimulus — on cement, steel and so on — will necessarily be limited.

“This is a supply-side correction in property,” Yao writes in a new report. “While housing sales will likely improve this year, construction and all the industrial activity that depends on it will not. Therefore an upturn in housing sales will not deliver as much of a boost to growth.”

I checked in with Yao about which data series should frighten Beijing most: “It is floor space started,” she says. Property starts (measured in area of floor space) declined 26 per cent year-over-year in December following a 35 per cent plunge in November. That marks a dramatic deepening of the 5.5 per cent plunge seen between January and October 2014. Also last year, parcels of land allotted for new projects slid 25 per cent, a blow for highly indebted local governments that rely on such sales.

It gets worse. Even with contingency plans to stabilise the market, “we believe China’s underlying housing demand is peaking and will soon start declining,” Yao says. That’s a problem given the current oversupply — all those ghost cities....

What will all those construction/steel/concrete workers do? Could it have something to do with war, perhaps?

Stay

[bimetalaupt]

Feb 28, 2015 11:30:34 GMT -5 Aman A.K.A. Ahamburger said:

China New-Home Prices Swing to Decline in February, which has lead to the PBOC to drop interest rates, yet again - like the last one did so much...

The problem is of course - ghost cities! As a top Chinese developer has already stated, China's urbanization is done.

China’s property problem is worse than it seems

China’s real problem is that new construction is evaporating no matter what sales and prices do. That means the knock-on effects of additional stimulus — on cement, steel and so on — will necessarily be limited.

“This is a supply-side correction in property,” Yao writes in a new report. “While housing sales will likely improve this year, construction and all the industrial activity that depends on it will not. Therefore an upturn in housing sales will not deliver as much of a boost to growth.”

I checked in with Yao about which data series should frighten Beijing most: “It is floor space started,” she says. Property starts (measured in area of floor space) declined 26 per cent year-over-year in December following a 35 per cent plunge in November. That marks a dramatic deepening of the 5.5 per cent plunge seen between January and October 2014. Also last year, parcels of land allotted for new projects slid 25 per cent, a blow for highly indebted local governments that rely on such sales.

It gets worse. Even with contingency plans to stabilise the market, “we believe China’s underlying housing demand is peaking and will soon start declining,” Yao says. That’s a problem given the current oversupply — all those ghost cities....

What will all those construction/steel/concrete workers do? Could it have something to do with war, perhaps?

Stay

A++++,

It looks like they(Central Bank of China)are fighting the depression caused by overbuilding as they dropped core interest rate by 25 basis points.  When will all this money start to increase world GDP?

Just a thought,

BiMetalAuPt

China cuts rate 25 bps after inflation falls to historic lows
China's central bank cut its benchmark lending and deposit rates by a further 25 basis points to counter the dampening impact on economic activity from the rise in real interest rates after economic restructuring and the sharp fall in international commodity prices pushed down consumer price inflation to historic lows.
The People's Bank of China (PBOC), which last cut its lending rate by 40 basis points on Nov. 22, 2014, cut the one-year lending rate to 5.35 percent from 5.60 percent while the one-year deposit rate was cut to 2.5 percent from 2.75 percent.
In addition, the PBOC continued the process of allowing prices to become more market-oriented by raising the maximum that financial institutions can offer for deposits to 1.3 times the benchmark deposit rate from 1.2 times. In November the PBOC raised the limit from a previous 1.1 times.
The central bank described the higher deposit rate limit as an "important step" in its market-oriented reform the would help expand the floating range of interest rates on deposits, allow financial institutions further room to set their prices independently, improve the level of financial services along and improve the role of market interest rates in allocating resources.
China's consumer price inflation rate fell to 0.8 percent in January from 1.5 percent in December while the core inflation rate fell to 1.2 percent from 1.3 percent.
Economists had expected the PBOC to cut rates at some point and on Feb. 10 the bank made it clear that was ready to fight any further economic weakening due to weakening external demand.
China's Gross Domestic Product expanded by only 1.5 percent in the fourth quarter of 2014 from the third quarter for annual growth of 7.3 percent. Full-year 2014 growth was 7.4 percent, down from 2013's 7.8 percent, below the government's 7.5 percent target and the weakest growth in 24 years.
On Feb. 4 the PBOC cut its reserve requirement on big banks by 50 basis points to 19.50 percent, freeing up 600 billion yuan that was held as reserves, and economists are looking for further cuts.

www.CentralBankNews.info

We are not alone is the question: why has all the infused cash infusion ( IE M1= day to day operations) and growing long term deposits (M3 =long term plant development) have so little effect on the economy around the world? 

[Aman A.K.A. Ahamburger]

,

They can try and fight it all they want, problem is the battle is already lost - you can't forced demand where there is a massive oversupply. Really, we'll look back on this point in history and wonder how anyone could have be naïve enough to believe a massive command economy with over a billions people would be successful.

The question is when? Simple amswer; after the war.

Let's face it, China has been a dumping ground for everything for years and the collapse of communist China will be the greatest debt consolidation-write off in known history.

God bless,

[Aman A.K.A. Ahamburger]

I know a couple people that agree with this "old timer" in the article below...

Goldman Partner Who Called Japan's Demise Sees Similarities With China

Forecasts for China to surpass the U.S. as the world’s main economic power are misplaced. So says an observer who foresaw Japan’s eventual demise a year before its land-price bubble began to burst.

“The vulnerabilities in China today are very similar to the vulnerabilities in Japan,” said Roy Smith, 76, who was a Goldman Sachs Group Inc. partner when he wrote a column saying Japan’s rise as a financial hegemon was done. “Nobody agrees with me. But they didn’t agree with me in 1990, so at least I have one right.”

[Aman A.K.A. Ahamburger]

Some encouraging numbers to start the year off..

China Jan-Feb housing sales fall 16.7% on year

China data point to sharper slowdown

China’s economy slowed at its sharpest rate in the first two months of the year since the global financial crisis, heightening fears that this deceleration will undermine global growth.

Chinese industrial production, regarded as a good proxy for broader economic growth, expanded 6.8 per cent in January and February from a year earlier. Excluding the financial crisis, it was the slowest reading since records started in 1995, Goldman Sachs said.

Fixed asset investment and retail sales also slowed significantly, data showed on Wednesday.

“Today’s disappointing data release highlights just how quickly domestic demand is deteriorating as the ongoing property downturn continues to spread its negative impact through the economy,” said Wang Tao, UBS chief China economist.

In fact, things are going so great in China that, China prepares mergers for big state-owned enterprises.

We all know how strong these businesses must be if they are merging...

[bimetalaupt]

Korea Central Bank just took a 0.25% reduction in overnight rates!  My thought are more general for the decline in world trade.  Korea has been a world power in very large Diesel driven Container and Oil transport for years.  The world economy is in far worst condition then most know.  For investment : safe low beta holding show more promise in this low economic WAR: as wxyz stated in the form of a question: low beta American stocks: for as we assume the interest rates are based long term on inflation.

Just my personal opinion: Just a thought,

BiMetalAuPt

from   www.centralbanknews.info/

 

  Korea cuts rate 25 bps, growth, inflation below forecasts
South Korea's central bank cut its base rate by 25 basis points to 1.75 percent, a surprise to most economists, saying economic growth and inflation will be below its expectations and the negative output gap will continue for longer than anticipated.
The Bank of Korea (BOK), which cut its rate by 50 basis points in 2014, was clearly more downbeat about economic growth prospects than in January, saying exports had decreased, domestic demand was sluggish and the mood among economic agents had clearly not recovered.
On Jan. 14 the BOK appeared to lay the groundwork for today's rate cut by downgrading its view of exports and the output gap. Nevertheless, most economists had expected the BOK to wait with any rate cut until next month when it updates its economic forecast.
In January the BOK cut its 2015 growth forecast to 3.4 percent from 3.9 percent. In the fourth quarter of 2014 Korea's Gross Domestic Product expanded by 0.4 percent from the third quarter for annual growth of 2.7 percent, down from 3.2 percent in the third quarter.
While the BOK repeated its view that the global economy would "sustain its modest recovery," it noted that growth in emerging markets, including China, had slowed. In January the BOK said that growth in China had "slowed somewhat."
Korea's headline inflation rate fell further to 0.5 percent in February from January's 0.8 percent and the BOK forecast that "due mainly to the effects of low oil prices, inflation will continue at a level lower than originally expected."
In January the BOK cut its 2015 inflation forecast to 1.9 percent from 2.5 percent forecast in November 2014. The BOK targets inflation of 2.5 percent to 3.5 percent.

[Aman A.K.A. Ahamburger]

The lowest beta there is are index funds based on those big companies, plus dividends. For close to 99% of people out there this is probably the best way to go. Best part is that you can add "risk" by "discounted valued added investing". Buy sector funds that pay dividends when a sector has taken a beating - oil...

Agreed that world trade is week. Since 2013 overseas profits were in trouble.. Look at how much better things have gotten in the east since 2013.

[Aman A.K.A. Ahamburger]

I do declare...

China’s Economic Bubble Ready to Burst?

The latest numbers out of China no longer mask its economic decline. Chinese industrial production “slowed at its sharpest rate in the first two months of the year since the global financial crisis” shouted the Financial Times on Wednesday.

Wang Tao, UBS’ chief economist on the Chinese economy, was dour: "Today’s disappointing data release highlights just how quickly domestic demand is deteriorating as the ongoing [real estate] downturn continues to spread its negative impact through the economy."

In China that impact is huge, representing more than 20 percent of the country’s total economic output. From the mining of iron ore to the employing of finish carpenters, the ripple effect of any decline in housing is immense. That decline is breathtaking: In just the first two months of 2015, housing sales have dropped by one-sixth — that’s 16 percent! — compared to a year ago. And that follows a 7.6 percent decline in December. This is the worst decline in the real estate market since the start of the global financial crisis, and likely signals the final victory of supply over demand that the Chinese government has stoked for decades.

Efforts to thwart the decline are failing as well. The country’s central bank has reduced interest rates to a minuscule 0.25 percent while loosening loan requirements on new mortgages. For years the yuan has been perceived as a poor place to store cash, and so citizens have been buying up new apartments as the new “store of value” — some 50 million of them. They remain unoccupied because the minute a family moves in, the secondary market, which the government can’t control, takes over, forcing resale prices down significantly. Because much of that new construction is debt-financed, either directly or through the now well-known “shadow” banking system, a sharp decline in prices pushes borrowers into default.

[Aman A.K.A. Ahamburger]

On top of the cracks starting to show in European "bad banks"..

China housing prices continue to fall in February

A persistent decline in housing sales in the first two months this year, following a downturn in 2014, has compelled policymakers to introduce further accommodative policy moves. The central bank lowered benchmark interest rates in late February, the second cut after a reduction in November, and also reduced the amount of money banks have to set aside as reserves.

Many Chinese cities are still saddled with high inventory levels of homes, and concerns over rising debt of property developers and local governments are weighing on the health of the sector.

On a month-over-month basis, prices in February slipped 0.43%, unchanged from the 0.43% fall in January, but widening from December's 0.40% decline, according to calculations by The Wall Street Journal.

On a year-over-year basis, the average price of new homes declined by 5.7% in February, compared with a 5.1% decrease in January and 4.3% fall in December.

Excluding public housing, private-sector home prices fell in 69 of 70 cities in February from a year earlier, unchanged from the 69 cities that posted declines in January, according to National Bureau of Statistics data on Wednesday. On a month-over-month basis, home prices fell in 66 of 70 cities in February, up from January's 64.

Premier Li Keqiang said Sunday that China has ample tools to "intensify fine-tuning measures to assure market confidence under current economic conditions," signaling that Beijing would be willing to lend support to keep its economy humming.

Why China Won't Manage The Great Debt Escape

David Shambaugh, once one of Beijing’s favorite China specialists, turned on his friends in a stunning essay in the Wall Street Journal, published on the 6th of this month. “The endgame of Chinese communist rule has now begun, I believe, and it has progressed further than many think,” he writes in “The Coming Chinese Crackup.”

Shambaugh, a George Washington University professor, lists five “telling indications of the regime’s vulnerability and the party’s systemic weaknesses.” The last on his list is by far the most important: the deteriorating economy. He states that reforms are “sputtering on the launchpad,” suggesting that growth is held hostage to the process.

[Aman A.K.A. Ahamburger]

Don't believe me? Just watch.

Singapore Dollar Prospects Worst Since ’98 as Asia Losses Spread

Singapore’s dollar is headed for a third straight quarterly loss versus its U.S. counterpart, and surging forward rates imply that the currency will depreciate at the fastest clip since 1998.

That signals pessimism about growth and deflation across the region because the Singapore dollar’s often traded in place of currencies that aren’t as liquid. The island state is one of Asia’s main financial centers and its currency tends to be more resilient than peers from Thailand’s baht to Indonesia’s rupiah, making the bearishness even more significant.

[Aman A.K.A. Ahamburger]

Just what the biggest speculative bubble in human history needs, a bit more...

U.S. Dot-Com Bubble Was Nothing Compared to Today’s China Prices

The industry is leading gains in China’s $6.9 trillion stock market, sending valuations to an average 220 times reported profits, the most expensive level among global peers. When the Nasdaq Composite Index peaked in March 2000, technology companies in the U.S. had a mean price-to-earnings ratio of 156.

Shanghai stock traders make bets backed by trillion-yuan debt

Traders in the world’s highest-flying stock market of Shanghai now have more than 1 trillion yuan (S$219 billion) of borrowed cash backing their bets....

The outstanding balance of the margin debt on China’s smaller exchange in Shenzhen was 502.5 billion yuan on April 1. That puts the combined figure for China’s two main bourses at the equivalent of about US$242 billion (S$329 billion). In comparison, the United States, which has a stock market almost four times the size of China’s, margin debt on the New York Stock Exchange was about US$465 billion at the end of February.

[Aman A.K.A. Ahamburger]

.....

Shanghai Real Estate Market Dips Again

Shanghai’s real estate bubble got more holes pumped into it on Tuesday.

China’s most expensive city has been a point of concern for Beijing policy makers. Over the years, the government has all but locked the door to second and third home sales. A relaxation of those policies have kept Shanghai real estate stable. But the latest data shows new home sales and supply fell last week despite those policies, according to Uwin Real Estate Information Services.

New home sales dropped 10.5% from a week earlier during the seven-day period ending April 5. On the supply side, new home square footage was 71,100 square meters, down 64%.

“The latest government endeavor to loosen its mortgage policies is supposed to help boost residential sales of both new and existing home, it is always the price and the supply and demand situation that finally affect the transaction volume,” Huang Zhijian, chief analyst at Uwin, told the Shanghai Daily on Tuesday. “Real estate developers better focus on cutting the inventory which still stands at high levels.”

Labor Strikes Surge in China

[Aman A.K.A. Ahamburger]

You know when you get a pit, way down deep in your stomach? You do all you can to hold it in, but in the back of your mind you know the inevitable if on the way....

China weekly land sales revenue sinks 57 per cent

China’s Big Banks Double Their Write-offs

China’s major banks last year wrote or spun off more than twice what they did in 2013 to keep the fallout from a slowdown in China’s economy from lingering on their balance sheets.

[Aman A.K.A. Ahamburger]

If a picture is worth a thousand words - two might be priceless.

The slow motion plane crash:

The Latest Numbers From China Show the Government Is Facing a Huge Challenge

[Aman A.K.A. Ahamburger]

But, but, but, the pace of decline is slowing month to month..

China Home Prices Fall at Slower Pace in March

On a year-on-year basis however, the decline in home prices continued to widen in March for the seventh straight month, falling 6.1% from February's 5.7% drop. The index first showed a year-on-year fall in September.....

On a year-on-year basis, home prices fell in all 70 cities in March, up from the 69 cities that posted declines in February.

China's economy is worse than Beijing admits and demand is plunging for the first time on record

China's economy is not looking too healthy right now. But it's probably even worse than it looks.

Yesterday Daiwa Capital Markets released their own sceptical take on China's official figures. Though the headline statistics suggest growth of 7% annualised in the first three months of the year, they noted that power output was completely flat and imports from the country's commodity suppliers were plunging.

And Lombard Street Research (LSR) economist Diana Choyleva has just released her latest figures on the world's biggest developing economy, and they're similarly ugly. Domestic demand is falling.

And demand isn't just plunging at the fastest rate on record. It's plunging for the only time on record. Even in the midst of the global financial crisis, when China's trading partners were slashing back their purchases, domestic demand didn't actually fall.



The year-on-year figure is at its lowest level in at least 10 years too.

LSR's data only goes back 10 years, but if it went back 25 years it would likely tell the same story: China's official growth figures have showed expansion above 6% since the early 1990s — and that's included a slowdown in 1999. Average annual growth has been closer to 10%.

LSR's analysts use an alternative calculation of China's GDP data that shows a negative figure.

So if the current quarter is as bad as Q1, the country would actually be in a technical recession (two quarters of negative growth):

[bimetalaupt]

ACTION IN THE PBOC SWIFT.....

China makes big cut in bank reserve requirement to fight slowdown

BEIJING (Reuters) - China's central bank on Sunday cut the amount of cash that banks must hold as reserves, the second industry-wide cut in two months, adding more liquidity to the world's second-biggest economy to help spur bank lending and combat slowing growth.

The People's Bank of China (PBOC) lowered the reserve requirement ratio (RRR) for all banks by 100 basis points to 18.5 percent, effective from April 20, the central bank said in a statement on its website www.pbc.gov.cn.

"Though the growth in the first quarter met the official target of around 7 percent for 2015, the slowdown in several areas, including industrial output and retail sales, has caused concern," said a report published by the official Xinhua news service covering the announcement.
REACTION!!!!!
The latest cut, the deepest single reduction since the depth of the global crisis in 2008, shows how the central bank is stepping up efforts to ward off a sharp slowdown in the economy.

AGGRESSIVE SIGNAL

On the corporate side, executives say they are wary of embarking on fresh investments, given weak demand and weakening producer pricing power.

As a result think-tanks and advisers to the government are polarizing into those calling for more stimulus to arrest the slowdown and a rival camp emphasizing structural reforms as the route to sustainable growth.

"The amplitude of the reduction reflects a more aggressive policy signal," said Xie Yaxuan, macroeconomics research director at China Merchants Securities.

"The reduction should help make up for the negative growth of foreign exchange in the first quarter, which created a hole in the monetary base," he said.

The central bank also announced targeted RRR cuts; an additional 100 bps cut for rural credit cooperatives and village banks, as well as a 200 basis point cut for the China Agricultural Development Bank, one of China's major policy lenders.

The PBOC last cut the RRR for all commercial banks by 50 basis points on Feb. 4, the first industry-wide cut since May 2012.

finance.yahoo.com/news/china-cuts-bank-requirement-counter-093446462.html

[Aman A.K.A. Ahamburger]

Cut reserves, try to infuse cash, bottom line domestic demand has followed the general economy.. We called the pop right today , but as you can see by the markets and the news out of China...

Does the Collapse of a Chinese Developer Signal the Start of More Defaults?

Kaisa Group Holdings Ltd. captivated Wall Street by minting fortunes from troubled real estate in China.

Now the developer is in trouble itself -- and the question is how far the pain will spread.

On Monday, the news came that many had been dreading for months: The company, caught up in an anti-corruption probe, is buckling under its debts as a slumping real estate market drags down the entire Chinese economy. After missing $52 million in interest payments, Kaisa, once a stock market darling, now confronts an uncertain future.

It’s a remarkable comedown for a company that burst onto the scene in 2007 as billions poured into Chinese real estate. Its troubles, long in coming, have set investors on edge and have many asking if Kaisa is a one-off or the start of something worse. Just last week, Standard & Poor’s warned that “more defaults cannot be ruled out,” saying it’s concerned about how profitability in the Chinese property sector is faltering.

“More than one big developer is going to go under,” said Erik Gordon, a professor at the University of Michigan who examines legal issues in corporate and sovereign debt restructuring efforts. “Busts follow booms. There’s no reason for it to be any different in China.”

[Aman A.K.A. Ahamburger]

YES, THE BOTTOM APPEARS TO BE FALLING OUT OF THE CHINESE ECONOMY!!!!!!

Stay

China suffers first default by state-owned company