Shadow Banking

The Endgame

There is a growing fear in financial and monetary circles that there is something deeply wrong with the global economy. Publicly, officials and practitioners alike have become confused by policy failures, and privately, occasionally even downright pessimistic, at a loss to see a statist solution. It is hardly exaggerating to say there is a growing feeling of impending doom. In short, growing evidence of price inflation and stagnant production can be expected to materially increase the risk of a global banking and currency meltdown. The best escape-route is ownership of anything other than purely financial assets and fiat currency deposits. No wonder the price of gold, which is the soundest of moneys, appears to have entered a new bull market.

China Stops Trying To Fool The World; World Is Sorry

China is the latest in a growing line of “command and control” economies that have risen to prominence, captured the imagination of people who find free markets too messy for comfort, and then blown up when it turns out that dictators have no idea how to allocate capital.

China "Wealth Manager" Disappears With $154 Million

It now appears that we've reached the point in the China speculative frenzy game where instead of waiting around to be arrested, those running shady ponzi schemes are now pulling the ripcord, clearing out as many bank accounts as possible, and just disappearing.

Hillary Clinton's Full 'Speech' To Goldman Sachs

"Money was a lazy b*tch, until you put it to work! And look how it works! Look how it grows! Materializes out of nowhere! As leaders, innovators, captains of finance, you will always be subject of the jealous resentment, the petty tantrums of the unwashed masses, the insolvent, the irresponsible, the invidious, the losers. They will envy you, your successes, they will despise you, but they secretly want to be like you! Irresponsible single mothers, uneducated immigrants, lead-drinking ghetto-strutters, homeless, crying, babies, starving senior citizens, obnoxious, entitled African Americans who object to having bullets pumped into their bodies by police: all these people are angry, entitled, and making noise, and they are endangering our democracy and economy, our greatness."

George Soros Warns "China Resembles US In 2008", Hard Landing "Practically Unavoidable"

China's massive credit growth in March (and $1 trillion surge in total social financing in Q1) is a "warning sign" according to billionaire George Soros, "because it shows how much work is needed to stop the slowdown." Speaking at an event in new York this evening, Soros commented on "troubling developments" in China, the anti-corruption drive's impact on capital outflows and the real-estate bubble "feeding on itself." His conclusion, rather ominously, was that despite all the naysayers and fiction-peddlers, China "resembles US in 2007-8," before credit markets seized up and spurred a global recession.

BofA Notices Something Troubling: China's Debt Bubble Has Burst

We have noticed a sharp jump since mid-2015 in the total value of reported defaults of shadow banking products, defined here as non-bank-loan debt instruments that include bonds, trusts, and credit products offered by peer-to-peer (P2P) and various offline wealth management companies (WMCs).... The question is whether the government is closing the stable door after the horse has bolted. We suspect that the answer is yes.

Bizarro M&A: China's Most Innovative Capital Outflow Yet

The scale of China's outbound investment wave is so great that the value of deals announced in the third quarter of 2015 exceeded China's current-account surplus for the same period, according to data compiled by Bloomberg. That trick will be repeated in the current quarter, unless China puts in its best current-account performance since 2008. What is going on here? The answer is quite simple: following Beijing's ramp up in capital outflows, China has found a new and innovative way to export funds offshore.

P2P Property Lending Explodes In China; Officials Panic

“Funds used for down payments cannot be borrowed." You might think that what’s implied there is too bad to be true - even in the increasingly ludicrous world of P2P and marketplace lending. But in fact, P2P lenders in China have indeed been funding down payments on homes, embedding an enormous amount of excess leverage into the market while simultaneously driving up prices in Tier-1 cities.

Why Our Financial System Is Like The Titanic

The "unsinkable" global financial system is rushing headlong toward its encounter with the iceberg, while the passengers and crew remain supremely confident and unaware of the risks, risks that will only become "obvious" after the global financial system has broken in half and sunk to the bottom, destroying most of those who believed it unsinkable.