This page has been archived and commenting is disabled.

European Digest And Forecast From Erik Nielsen

Tyler Durden's picture




 

From Goldman's Erik Nielsen

Europe this week

Happy Saturday,

With no particular reference to Denmark’s fine victory this evening, I am just wondering what European football would look like had it not been for the smaller countries - be it Denmark, the Netherlands, Switzerland, or Serbia …  Its certainly difficult to see much hope in England, France, Spain or Italy – or in Germany after that last performance.  Away from football, these are my thoughts on Europe on this fine evening in Chiswick:

  • We are through another week of good real-economy data releases and (grudgingly) improving markets.
  • The EFSF has been formally established.  Along with the Commission’s and IMF money, I think it’s a serious defence mechanism which ought to help further stabilise markets.
  • Stress tests for the banking system will be published next month.  Good, because that’s what the market demands, but I worry we might be heading into a disappointment because markets might expect testing against extreme tail-end risks considered as absurd by policymakers.
  • The ECB has now bought €47bn worth of sovereign debt - still peanuts in any reasonable comparison, but I think they may be looking to wind down the purchases once the EFSF is up and running in July.
  • The IMF spoke this past week on Greece (okay with program); Spain (happy with policy reforms); and France (marginally critical on fiscal - too polite).
  • G20 meeting this coming week; I wonder if the heat will turn on Germany now that China has announced a re-introduction of some FX flexibility.
  • We are heading into PMI-week in the Euro-zone; we are looking for slight improvements.
  • The UK will see the government’s emergency budget on Tuesday; big budget cuts on their way.
  • The Swiss National Bank will publish its May balance sheet this week confirming their huge FX-interventions.
  • In Sweden we’ll get the key KI/NIER economic tendency survey on Wednesday.  It’s already at its highest level since August 2007, but we remain shamelessly optimistic.
  • Poland holds presidential elections tomorrow with a likely second round on July 4.  Outcome very important for policies.
  • The central banks in Norway, Hungary and the Czech Republic will all meet this week to consider their interest rates; we expect all three to leave rates unchanged.
  • The IMF arrives back in Ukraine on Monday for a week’s talk on how to restart the program.  We do not expect agreement this week.

 

  1. I am sorry to sound like a broken record here in my opening paragraph, but – alas – we are through yet another week of pretty good real-economy data in Europe, further positive signs on the policy front, and stabilising markets.  With a 0.8%mom (non-annualised) growth rate in April, Euro-zone industrial production delivered its 11th consecutive monthly increase, while Poland printed the first hard European number for May, namely a blockbuster 3.4% mom, seasonally adjusted, growth rate in industrial production (i.e. +14% yoy).  The massive increase was (again) led by products in exports-oriented sectors, including the computers, electronics and optics category (+ 95%yoy) as well as chemicals, metals and vehicles.  (Interestingly, while Polish export of vehicle is doing very well, there are stories that Fiat is considering relocating some of its production from Poland back to Italy where deals with the unions are likely to lead to greater productivity.)  As Magda Polan has pointed out, with 52% of Polish exports going to the Euro-zone, half of which to Germany, why do people keep worrying that there is no demand in the Euro-zone – or that German export growth is not benefitting the rest of Europe?  It’s all still looking pretty alright to me on the real side.  Meanwhile, we got more progress on the European policy front (as summarised below), while markets (grudgingly, it seems) continued to improve.  As discussed below, I rather suspect that we might be in for more of the same this coming week.  
  2. In terms of policy measures, the Euro-zone finance ministers formally established the European Financial Stability Facility (EFSF) on Monday to be loaded with guarantees from the Euro-zone member states, excluding Greece, worth up to €440bn.  Klaus Regling has been appointed CEO (great choice on so many levels) and the whole thing is ready to roll as soon as 90% of the €440bn has been committed by the member states, which probably is within the next few weeks.  The present thinking is to over-collateralise any issuance by some 20% (the exact ratio is likely to be negotiated with the credit rating agencies to secure AAA rating – if anyone still cares), making some €365bn available along with the €60bn from the Commission and about €215bn from the IMF (if the indicated EU/IMF ratio were to be maintained), in case a Euro-zone sovereign were to encounter funding problems.  In my view, €640bn is a serious amount of money – enough to fully fund Spain, Portugal and Ireland for about as long as Greece has been fully funded – in other words, a properly loaded bazooka, in Hank Paulson’s world.  If it weren’t for the nagging question what Regling & Co actually will be doing all day in Luxembourg, I would tend to conclude that the combination of the improving economy, policy reforms, better markets, and the size of the bazooka, means that the EFSF might never be used (in which case it’ll most likely fold into something slightly different in three years’ time.)  If, however, it will be needed, the ESFS would sell securities in the market for its share of the first tranche, the proceeds of which would be pooled with the Commission’s and the IMF’s money and disbursed against quarterly policy conditionality.  Some investors have expressed doubt that the EFSF could actually sell any such securities in times of additional stress.  I don’t see any reason why they shouldn’t be able to sell its securities to banks (to be repo’ed at the ECB) and real money accounts.  In other words, count me among those thinking this is good enough. 
  3. On other important policy initiatives, the EU summit agreed to publish stress tests for the 25 biggest European banks, and several individual countries, including Spain, will publish for all their banks.  The decision came after a virtual “demand” from the market that “we want to know”, and being confident that the market is overestimating by a wide margin the problems in the Spanish banking system, Zapatero was the first to agree to publish stress test results for all the Spanish banks.  Supported by Commission president Barroso, the other leaders eventually agreed, although Germany raised a legitimate concern: In most countries the legal system does not give the right of the regulators (or government) to publish such company-specific information; I suppose peer – and other – pressures might be employed.  As we have argued for months, while there are plenty of issues in the European banking sector, we do not see any systemic issues outside Greece, so, in principle, the publication of stress tests is a good thing.  However, I am a little worried whether we are being set up for a disappointment.  First, there are way too many investors who have come to believe that it was the stress tests in the US that put everything to rest on that side of the Atlantic, and therefore similar tests should be conducted and published in Europe.  But a closer look at the events around the US stress tests and their publication (and Fannie and Freddy weren’t even included!) would lead most people to conclude that maybe they weren’t that important.  Second, there is – in my view – a big risk that market participants’ expectations of methodology and assumptions for the tests may be out of sync with what policymakers are preparing.  Specifically, do the two sides agree on how to value the banks’ sovereign holdings? Or their real estate holdings?  The additional information and transparency will be good, and the subsequent capitalization will be welcome and move things in the right direction, but I worry that markets might not be satisfied unless the system gets measured against extreme tail-end events, which is not likely – and then what?  Interbank guarantees?
  4. The ECB said on Tuesday that they bought €6.5bn of sovereign debt last week, taking their stock of these assets to €47bn.  On Thursday, Executive Board member Gonzalez-Paramo  said to FT Deutschland that while he thought he saw better liquidity in some of the market segments, he acknowledged that “ the situation is not yet entirely normal."  My guess is that they may have bought another €5-10bn this past week and that they will continue to hit the market at least until the EFSF bazooka is fully loaded and on the table with Klaus Regling’s finger on the trigger.  By then, I rather suspect that the ECB will start testing the market with a gradual winding down of the purchases.   I believe that the ECB likes to think of the purchases as equivalent to FX-interventions, and I agree, but on that analogy, they really need not be in any hurry ending the purchases.  At recent weeks’ pace it would take them 6 ½ years of purchases to get to own a share of Euro-zone GDP equivalent to what the SNB has bought via FX-interventions – or if you were to think of it as QE (which would not be right, in my view), then it would take them some two years of purchases at the present pace to get to own the same share of GDP as the Bank of England presently holds of UK government securities.  I know that it came as a shock to some when the ECB crossed the Rubicon, but I really fail to share those concerns, given the situation we are in, and the most likely counter-factual.
  5. The IMF was in three different head lines for Europe this past week:  First, along with the EU Commission and the ECB they conducted a (non-comprehensive) review of the Greek program and concluded that things look okay; the state cash deficit was actually lower than projected in the program.  This didn’t prevent Moody’s from downgrading the Greek sovereign by a whopping four notches from A3 to Ba1; i.e. to junk, without any relevant news to my knowledge.  Needless to say, this should have happened about a year ago, but in this case the term “better late than never” just doesn’t apply.  (Incidentally, when I last checked, a 10-year Greek government bond traded at about 52 cents on the Euro with a coupon of more than 4%, and with a rather small risk of a debt restructuring for the next 18-24 months while the primary balance is in deficit, I am just started to wonder – but I’m neither a PM nor a strategist.)  Second, Strauss-Kahn visited Madrid and expressed his strong support for the Spanish government’s reform program.  (His trip created some silly rumours about a big rescue package being negotiated.)  After listening to DSK in Madrid, does anyone still believe that - if it were to be needed - Spain could not (indeed, rather easily) reach agreement on the policy conditionality for a program?  Third, in their annual review of France, the IMF suggested that the government’s growth forecast of 2.5% per year from 2011 is too optimistic, and that fiscal contingency plans should be drawn up in case GDP underperforms.  Apart from this very valid point, I – for one – couldn’t help thinking that the IMF ought to pull off those kids’ gloves in their assessment of France; reforms are happening throughout Europe, but there is an increasing risk that France is falling behind.

Moving to this coming week:

  1. G20 meets in Toronto on Wednesday and Thursday.  President Obama has urged other G20 members to boost their domestic demand, and in an implicit reference to China he “underscored” that flexible FX-regimes are “essential” for global growth, while – in an apparent reference to Germany – he worried about too early policy withdrawal in countries with weak private sector demand and external surpluses.  Conveniently, earlier today, the People’s Bank of China announced that they’ll  further reform their exchange rate regime and enhance the CNY flexibility (see my colleagues’ comments on this).  While they have appreciated against the Euro in recent months, this is a further positive development also for Europe.  I don’t think G20 should expect Germany to reverse their plan for a gradual fiscal consolidation, starting next year, and frankly, I am not sure that they should.  Public debt sustainability is an increasingly hot topic in many countries (including the UK, as discussed below), and announcing a multi-year consolidation plan seems pretty sensible to me, particularly at a time when markets are looking to Germany to de facto anchor the entire Euro-zone system.  (Needless to say, this view of mine does not exclude the need for further reforms in Germany, including of the non-tradable sector.)  Otherwise it feels as if we are getting closer to agreement of some sort of taxation of the financial system.  
  2. In the Euro-zone, the traditional round of monthly business indicators are due out again this coming week, and although last month saw some general softening of sentiment, we expect most of the major business surveys to have stabilised, if not even improved a tad, again in June.  For the Euro-zone flash PMIs on Wednesday (both with EMEA-MAP relevance of 5), we expect small rises in both the manufacturing and services indices.  Ahead of the PMIs we’ll get the German Ifo survey (EMEA-MAP 3) on Tuesday (we expect a modest increase), and the French INSEE (EMEA-MAP 4) on Wednesday morning, which we think might ease a bit this time.  On the consumer side, we’ll get the latest reading on Italian consumer sentiment (EMEA-MAP 1) also Wednesday; it has been on a downward trend since the beginning of the year, but we think it might have firmed slightly this month.  In France, consumer spending numbers will surface on Thursday (EMEA-MAP 2), and here we also expect a rebound after disappointing prints the past few months.  Finally, Trichet speaks tomorrow, Monday, at the European Parliament, but he is very unlikely to provide any important news or interpretations.
  3. For anyone living in the UK, time is up!  The new government is wasting no time (and rightly so) in addressing the huge budget deficit, and when the emergency budget is presented on Tuesday we’ll know more about the distribution of the pain.  As Ben Broadbent points out, following last week's OBR report, in which the estimate of the structural deficit was raised to 8% of GDP, we expect a tightening on the order of 7% of GDP over the next four years.  That will be enough to push the primary balance comfortably into surplus and ensure - conditional on nominal growth matching or exceeding gilt yields at that point (something that's quite clearly the case currently) - that debt-to-GDP is on a declining path well ahead of the next general election.  We are less pessimistic about the size of the structural deficit and about how rapidly the economy is returning to trend, so we would expect the debt ratio to peak somewhat earlier.  (Incidentally, as we argued in Thursday’s European Weekly Analyst, one needs to take the numbers on structural deficits with a serious grain of salt.)  Of the expected 7% of GDP cut in the deficit, existing measures are enough to give you 1.4 percentage points this year, planned cuts in capital spending a further 1% pt.  A VAT hike measure might provide another 1% of GDP, leaving around half the 7% total to be met through reductions in current spending.  Part of this is likely to be achieved through a public sector pay freeze, worth around 0.5% of GDP per year.  Stay tuned for a more detailed discussion of all this from Ben Broadbent.
  4. In Switzerland, the SNB will publish on Monday its balance sheet for May in its entirety.  Needless to say, the key will be the confirmation that FX investments surged a whopping 51% from the previous record of CHF 153bn to CHF 232bn, as already indicated by the provisional release by the Federal Statistical Office of their balance.  (A speech also Monday by SNB Chairman Hildebrand is likely to include some discussion of the SNB’s policy of FX interventions.)   Also of note in Monday’s release will be broad money (M3) growth, which we expect to decrease from +5.4%yoy to +5.2%yoy as the trend moderation of liquidity in the private sector continues.  The key data will be the net export data for May.  After very strong growth in real exports in April (+3.1%mom), it is reasonable to expect some pull-back in Tuesday’s release but, with the external demand conditions facing Swiss exporters (particularly to emerging Asia) remaining robust, the trend of improvement in Swiss net trade is likely to continue – again defying the strength of the trade-weighted CHF.
  5. In Sweden the key KI/NIER Economic Tendency Survey is out on Wednesday, which, along with the Manufacturing PMI, is a key barometer of Swedish growth (EMEA-MAP Relevance Score: 5). The headline index is now at its highest level since August 2007, but we still see some room for further upside in the June release.  Even an unchanged reading in June would bring the quarterly average of the KI/NIER survey to 108.2 - on past form, a level consistent with approximately 1%qoq GDP non-annualised growth in Q2 2010.  Now they didn’t make it to South Africa they surely are working hard at home!
  6. Poland is holding presidential elections tomorrow Sunday.  Acting President Komorowski and opposition PiS leader Jaroslaw Kaczynski – the “new and soft” twin brother - are most likely to go into the second round because neither will get 50% tomorrow, with Komorowski winning in a close race on July 4.  This would open the way for the governing coalition to revive important policy initiatives previously vetoed by the deceased President.  An upset second round victory to Kaczynski could destabilize the current governing coalition and lead to early parliamentary elections, as argued by Magda Polan.
  7. There’ll be central bank meetings this coming week in Norway, Hungary and the Czech Republic; we expect no change in any of the rates, but Norges Bank is likely to revise down its policy rate projections.  In the Czech Republic, it will be the last meeting Governor Tuma will chair; Miroslav Singer will take over from the next one.  The appointment came as no surprise, but it is worthwhile noting that Singer is (another) Czech Euro-sceptic – and with the cool attitude towards the common currency in the three parties forming the new government, it looks like the idea of setting a Euro adoption date, briefly lifted before elections, is firmly gone from the agenda.
  8. The IMF is back in Ukraine on Monday for a week of discussions how to proceed.  Negotiations are likely to be tough; the Fund is less lenient than last year, while the Ukrainian authorities’ progress on reforms has been at best mixed. It will be tricky for them to agree on unpopular measures ahead of looming local elections, and the government has clearly started looking for other sources of financing while the talks drag on.   

… and that’s the way Europe looks from Chiswick on this Saturday night after hope in South Africa has been restored.

Best

Erik F. Nielsen
Chief European Economist
Goldman Sachs

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 06/20/2010 - 10:58 | 423519 trav7777
trav7777's picture

Digest, bitchez

Sun, 06/20/2010 - 14:38 | 423844 Jack H Barnes
Jack H Barnes's picture

Take "Goldman", drop the "man" and keep the rest...

Sun, 06/20/2010 - 20:53 | 424198 ZerOhead
ZerOhead's picture

Goddammit Ty... I believe I have seriously found a way to 'democratically' overthrow the US government and I need you fucking help!

Now please tell me why this plan won't work... I am losing patience with you guys... seriously!

http://www.zerohedge.com/forum/how-peacefully-overthrow-oligarchic-klept...

Sun, 06/20/2010 - 11:07 | 423531 bugs_
bugs_'s picture

Everything is under control.

Sun, 06/20/2010 - 20:53 | 424200 ZerOhead
Sun, 06/20/2010 - 11:13 | 423535 doublethink
doublethink's picture

 

what is it about "decoupled" London tap water?

 

Cocaine.

 

http://www.telegraph.co.uk/news/uknews/3325948/The-Thames-awash-with-coc...

 

Mon, 06/21/2010 - 00:52 | 424540 Illya Kuryakin
Illya Kuryakin's picture

Wait til they check the Hudson.

Sun, 06/20/2010 - 11:19 | 423545 xamax
xamax's picture

An interesting question about Nielsen:

Is he really so stupid to believe each statement from the ECB,Fed,IMF etc , or is his optimism only tactical ? I dont know how one read week for week this bs.    

Sun, 06/20/2010 - 11:20 | 423547 M31Capital
M31Capital's picture

hold on a second, good real economic data??  guess german economic sentiment isnt real, down apprx 50% m/m.  who gives a shit about the polish economy. at least u can listen to jim oneill and do the opposite.  this guy provides even less value.

Sun, 06/20/2010 - 20:43 | 424189 ZeroPower
ZeroPower's picture

Don't misconstrue this as a bull posting, but believe it or not, the EU has had decent news out of their big economies. Whether or not the stats are 'tailored' like they typically are in the US (last 2 weeks of bad news is besides the point), EUR has been increasing simply because there has been no more bad news. 

And the Polish economy is the only one who wasn't affected by the financial meltdown, so while theyre insignificant for us in America, they are definitely on their way to become a more 'Western' country in the EU creating jobs and being a good example for the non-debt ridden countries.

Sun, 06/20/2010 - 11:39 | 423565 10044
10044's picture

now the question is... When is Tyler going to stop posting crap from Goldman or at least title it "for Laughter purposes only" ??

c'mon Tyler... enough goldman S***, we've had it with those luciferian, insider dealer, criminal sheisters... OK MAN???

Sun, 06/20/2010 - 11:51 | 423575 Duuude
Duuude's picture

 

If'n ya look at it through a Pythonesque lens it works.

 

http://www.youtube.com/watch?v=npjOSLCR2hE

Sun, 06/20/2010 - 13:35 | 423732 unwashedmass
unwashedmass's picture

 

i don't want them to stop....do you know how much you could have made betting against their reco's the last two months?

i do.

thank you zero.

Sun, 06/20/2010 - 14:48 | 423862 LeBalance
LeBalance's picture

Do you keep and eyeball or six on the one's who control the game?

Sun, 06/20/2010 - 15:03 | 423889 Pamela Anderson
Pamela Anderson's picture

"If you know the enemy and know yourself you need not fear the results of a hundred battles."

                   Tsun Tzu's The Art of War

 

Zero Hedge keep posting Goldman's info!

Sun, 06/20/2010 - 18:34 | 424093 Quantum Nucleonics
Quantum Nucleonics's picture

Throughout the cold war, someone at the CIA read Pravda evey day.

Sun, 06/20/2010 - 11:40 | 423567 Turd Ferguson
Turd Ferguson's picture

This guy, Nielsen, is such a fucking douchebag I can hardly stand it.

GS screws their "clients" at every opportunity and hands out nonsense, BS tripe like this as research and opinion. What a joke they are. 

Sun, 06/20/2010 - 18:15 | 424073 JLee2027
JLee2027's picture

Thank you. That clarified things.

Sun, 06/20/2010 - 12:05 | 423592 tom a taxpayer
tom a taxpayer's picture

  • "Stress tests for the banking system will be published next month.  Good, because that’s what the market demands, but I worry we might be heading into a disappointment because markets might expect testing against extreme tail-end risks considered as absurd by policymakers."
  • "Disappointment"? That is a grand understatement. How about something like, "I worry the markets might upchuck, puke, wretch, writhe, and croak when they see the "stress" tested is a just cloudy day in Cannes".

Sun, 06/20/2010 - 12:14 | 423606 schatzingrid
schatzingrid's picture

Second, there is – in my view – a big risk that market participants’ expectations of methodology and assumptions for the tests may be out of sync with what policymakers are preparing.  Specifically, do the two sides agree on how to value the banks’ sovereign holdings? Or their real estate holdings? 

EN is not stupid, he's very smart as a lot of GS's guys.

This is purely tactical. This is purely seeking alpha in a zero sum game. GS has bought tons of ES0910 contracts at 1050, as well as CAC and IBEX futures contracts.

They are now going to sell all this contracts to not so smart clients who have been eased with the results of the stress tests of spanish banks and will believe that China is going to let the renminbi rise. This is analysed as a proof that the global recovery is on track.

Unfortunately China won't let CNY rise. Saturday announcement is just a mixed of political tactic move ahead the G20 summit and anti-inflation tool implementation.

And unfortunately Spain will collapse. Spain is a 50 millions inhabitants country with more than 2,5 millions unsold properties (imagine 15 millions unsold properties in the US). Spain is not like Japan whose economy was crushed 15 years ago because of the real estate and banking sector crisis. Spain is not an export oriented economy and Spain is currently not able to print it's own currency. Japan was able to absorb all the losses thanks to it's positive current balance and high savings rate. As spanish private sector indebtness is close to 125%, Europe will not need a bazooka but a 3*3 406mm USS Missouri guns. As most of this 2,5 millions unsold properties are stuffed on the balance sheet of shadow SPV's inside shadows banks, no stress test based on current models will ever assume this huge risk.

Expect GS to announce 200 trading days without a single day in the red.

Sun, 06/20/2010 - 12:26 | 423622 Hdawg
Hdawg's picture

Absolutely correct about spain.

For 3 years spainish banks have been doing what ever possible not to foreclose.  Spain are dead, dead, dead in the water as they we designed to be.  This crisis will not be wasted...they will use it to centralise power away from sovereign states.

However, the ECB need first need to get the strongest economies legally hooked into this $1trillion bailout.  Then they'll bring out the main Spanish attraction in order to manufacture consent for centralising power by all the countries of Europe.

Sun, 06/20/2010 - 12:31 | 423634 A Man without Q...
A Man without Qualities's picture

There are about 15 million vacant homes in the US, excluding vacation property... so is it really that different?

Sun, 06/20/2010 - 12:36 | 423637 Hdawg
Hdawg's picture

No one saying America isn't totally doomed but Spain can not independently print money so it's gonna show up first there. 

Sun, 06/20/2010 - 12:51 | 423659 Muir
Muir's picture

"...– and then what?  Interbank guarantees?"

 

That comes right after "Specifically, do the two sides agree on how to value the banks’ sovereign holdings? Or their real estate holdings?" 

 

__

 

A hint?

Sun, 06/20/2010 - 13:00 | 423675 xamax
xamax's picture

schatz,

Agree with all. I would add that the outcome of the bank stress tests is known in advance, similar to the US. Or does anybody believe the self conducted stress tests by the ECB will show some weakness ?

As most happening now, its one farce more. I also dont know the outcome but all these lies will come back to our faces with factor 1trillion !   

 

Sun, 06/20/2010 - 16:46 | 423973 Mitchman
Mitchman's picture

The next step in the farce will be for the banks to sell tons of equity as they have been certified to be 100% pure by the ECB and the stress tests.  And guess who will be peddling it?

Sun, 06/20/2010 - 18:40 | 424101 Advoc8tr
Advoc8tr's picture

I wish it would pan out that way ... what explanation is there for the 15% rise in the Spanish Index over the last week when there has been nothing but bad news regarding their situation???  Just about lost my shirt shorting this so called bankrupt country with a sovereign debt crisis ...... WTF is going on.

Sun, 06/20/2010 - 12:17 | 423609 Howard777
Howard777's picture

The Chiswick Pump n Dump. That old chestnut.

Sun, 06/20/2010 - 12:18 | 423611 Hdawg
Hdawg's picture

What makes me die is these cunts associate themselves with the football in an brainless attempt at being like 'one of the lads'.

Fck this marketing. You're scum and you know you are...and you are not going to make it out the other side when this fcker goes pop. 

Sun, 06/20/2010 - 12:46 | 423647 tom a taxpayer
tom a taxpayer's picture

 

Yes. The sport for Eurobanksters is yachting, such as the J.P. Morgan Asset Management Round the Island Race. 

http://www.roundtheisland.org.uk/web/code/php/main_c.php?

 

Sun, 06/20/2010 - 13:01 | 423678 dan22
dan22's picture

While we are all focused on Europe the big suprise may come from China:

Local governmental officials, that are demanded from the government to produce double digit GDP growth numbers give real estate developers permits to build housing projects in return for bribes. They also get bribes in return for allowing the shark loan companies to operate under their jurastiction. some of them are active partners in shark loan businesses. For example, a party secretary of legal affairs, that controls the public security bureau, which is a court and prosecutor division of government in yongkang city, in zhe jiang province tired to run abroad using a passport in 2009 after he found out he can’t repay 60million Yuan. In li Every scheme has a ring leader who's job is to collect money from all the participants in the ponzi scheme. When some of these ponzi schemes blow up, the party leaders always get bailed out first, and some even ask local business owners to lend them money, and then bail out their own personal fund. After that the ring leader turns himself in and gets protection from the local government. Most of the funds that are collected in this classic ponzi finance go to local land purchases and real estate development. Part of the funds are used in order to pay back the rolling loan. The short term interest rate in this black market is very high and ranges between 20%-150% annual rate. The sources of the ponzi funds are diverse, as ordinary citizens, banks with corrupted bank officials, and state enterprises play the game. Source: China’s Shark Loan Ponzi Finance- A Few Selected Stories From The Chinese Press
Sun, 06/20/2010 - 13:09 | 423688 Silversinner
Silversinner's picture

Seeing green shoots evereywhere except not in economie.But lot of green shoots in my garden.

As a matter of fact I m eating them right now,really taste good.

All in mother nature

All out mother fuckers

 

Sun, 06/20/2010 - 13:35 | 423729 RingToneDeaf
RingToneDeaf's picture

This article is another example of the depth of this website.

A lot of people do not realize that there are a large number of people doing quite well in this environment.

Are you a formerly skilled worker now unemployed or did you luck out in associations with a loan shark? Are your legs the right shape?

Come on, it is all on the level.

Happy Fathers Day!

 

 

Sun, 06/20/2010 - 13:36 | 423733 London Dude Trader
London Dude Trader's picture

If Erik ever bothered to leave the coziness of his garden in Chiswick, headed 10 miles west to LHR, boarded a flight to Malaga, and then spent a weekend driving along the Costa del Sol all the way up to Murcia and Alicante, he would perhaps notice the extreme level of wild residential overdevelopment that Spain has experienced in the last decade. The last time I was down there, in August 2007, I noticed thousands upon thousands of newly-built empty apartments and countless  "for sale" signs everywhere, and that was even before the credit shit started to really hit the fan. So Erik, no, all is not well in Espana.

Hopefully both England and Denmark will soon be eliminated from the World Cup, so perhaps the two football-crazed GS morons can go back to doing some real work (if they ever did that is.)

Sun, 06/20/2010 - 13:43 | 423756 jkruffin
jkruffin's picture

I posted about this last week when accounts lady at the bank told me this was coming, and viola, it sure didn't take the scumbag bankers long behind closed doors to keep their bonuses rolling in.  Get your money out of these too big to fail banks!  Get into a credit union or local bank.

 

End Is Seen to Free Checking by Robin Sidel and Dan Fitzpatrick
Saturday, June 19, 2010

provided by

Bank of America Corp. (NYSE: BAC - News) and other banks are preparing new fees on basic banking services as they try to replace revenue lost to regulatory rules, in a push that is expected to spell an end to free checking accounts for many Americans.

Sun, 06/20/2010 - 14:03 | 423799 jesus_quintana
jesus_quintana's picture

I wish he'd STFU about living in Chiswick. I live there (here) and it's great apart from the parasitical squidling infestation we seem to have developed. I'm sorely tempted to call in Rentokil.

Sun, 06/20/2010 - 14:06 | 423801 GovernmentMule
GovernmentMule's picture

BUCHAREST (Reuters) – Got any spare change?

Romania's cash-strapped government is asking for donations to a fund set up to boost budget revenues and cushion the impact of the economic crisis, the finance ministry said on Friday.

Earlier this week, the centrist coalition cabinet narrowly won a no-confidence vote in parliament over sharp public sector wage and pensions cuts, key to keeping afloat its 20 billion-euro aid package led by the International Monetary Fund.

"Every person in Romania, except for legal entities, can donate cash into this account," the finance ministry said in a statement introducing its "solidarity fund."

When enforced, pay cuts will buy Romania time to reform its sprawling inefficient public administration and counter tax evasion, which should boost budget revenues.

But with tax receipts expected to disappoint in the first half of the year, every little bit that can be spared is a help.

Officials said the new fund is aimed at public officials who earn additional income on top of regular wages by serving on administrative boards of companies entirely or partially owned by the state.

Prime Minister Emil Boc has also said he will donate his wages to the fund, but the account is open to anyone who wishes to contribute.

Donations can be made by bank transfer to a special account and a list of donations will subsequently be published on the ministry's website.

 

What no PayPal Account?

Sun, 06/20/2010 - 14:37 | 423843 sheeple
sheeple's picture

Sounds like Nielsen is a devoted ZH reader.

Sun, 06/20/2010 - 18:19 | 424077 HarryWanger
HarryWanger's picture

Futures opened up pretty big. Market loves yuan news, I guess.

Mon, 06/21/2010 - 08:04 | 424732 Grand Supercycle
Grand Supercycle's picture

 

EURO buying support i've mentioned over the past few weeks has resulted in a bullish basing pattern on the daily chart. The important weekly chart remains bearish though.

http://stockmarket618.wordpress.com/about

Do NOT follow this link or you will be banned from the site!