Suddenly the Chinese market realized what we said earlier in the weekend, namely that with the much anticipated G-20 meeting a complete dud, and with no major stimulus on the horizon, suddenly the trapdoor below Chinese stocks opened and the Shanghai Composite has started the new month tumbling over 4%.
Nowhere is the return of the Chinese housing bubble more ovious than in Beijing where scalpers are charging up to ?3000 for service numbers at the government office where property transfers are recorded, due to long wait times in the wake of the recent transaction tax cuts launched by the government to spur the housing market. The result is peole paying thousands of Yuan to get a better place in line as they scramble to "flip that house."
"Investor hopes of coordinated G20 policy actions proved to be pure fantasy... It’s every country for themselves." Use any rally this week to move to the lowest level of equity exposure for this part of the cycle.
When a leading nominee for President gets something exactly right, we should applaud them for it. In this case, Donald Trump’s call to audit the Federal Reserve is dead on correct. Most Americans don’t realize this, but the Federal Reserve has far more power over the economy than anyone else does – including Barack Obama. The funny thing is that the Federal Reserve is not even part of the federal government. It is an independent private central bank that was designed by very powerful Wall Street interests a little over 100 years ago. It is at the heart of the debt-based financial system which is eating away at America like cancer, and it has no direct accountability to the American people whatsoever.
"The property bubble is everything to this economy and the country’s citizens, whether they know it or not, are 'all in'." Those who so to speak 'live inside the bubble' are no longer aware of its dangers. The mentality of Australians is generally well aligned with the country’s great weather – their outlook usually tends to be 'happy-go-lucky' and optimistic; but Australia’s citizens have far greater exposure to the bubble than is immediately obvious.
It's a tale of two cities in Canada where Vancouver's home prices in Vancouver are literally off the charts, while condos sales in beleaguered Calgary fell by 38% last year, the largest decline since the crisis.
One place that provides some glimpse into true price discovery was the just completed government tender, in which a parcel of land sold by the government in the New Territories went for nearly 70% less per square foot than a similar transaction in September.
The fiat currency system, fractional reserve banking fraud, insane Keynesian fiscal policies, and consumer debt based consumption economy are mathematically unsustainable, so they won’t be sustained. The world is about to sit down to a banquet of consequences, served by deranged central bankers.
What we do know is that the eurodollar system is failing and we know how it is failing. From negative swap spreads to the shrunken, depressed money and credit curves, they all spell out the death of the current standard. The money supply, for lack of a more appropriate term in the “dollar’s” universe, is in the long run converging with the shriveled economic baseline. The immediate problem for our current circumstances is that we don’t yet have any idea what that foundation might look like even now- how far is down.
"People [are] saying that we can't make a go of it and mail the keys to the bank. In the big cities, not so much because the average sale prices haven't really dropped much, we haven't seen the pain yet. But Calgary is getting pretty tight."
At a printing factory in the western city of Chongqing, a Reuters reporter was present when a local official visited last week to make sure the boss paid his workers before the Year of the Monkey begins. The official declined to speak with Reuters, although the boss later said it was an attempt to prevent unrest. "That's what the government is most fearful of," said the factory owner, who did not want to be named.
There is no productivity mystery, only a distinct and illegitimate lack of curiosity on the part of economists to simply take the Establishment Survey as gospel regardless of how little it fit the rest of the world. It also calls into question the legitimacy of the FOMC and monetary policy that was certainly subject to, and predicated upon, the same quackery. No matter how little the payroll reports described the economy as it was, including the relation to GDP, they held on to nothing else to instead deny everything.
"Why after several decades of 0% rates has the Japanese economy failed to respond? Why has the U.S. only averaged 2% real growth since the end of the Great Recession? “How’s it workin’ for ya?” – would be a curt, logical summary of the impotency of low interest rates to generate acceptable economic growth worldwide. "