Zhu Min

China's Housing Is Recovering, Just Ignore The 10 Billion Square Feet Of Vacant Housing

While prices in China's Tier 1 cities are soaring, let's put the country's vacant housing problem in context: China has some 13 million homes vacant - enough to house the families of several small countries . Actually, it's worse: Zhu Min, deputy managing director at the International Monetary Fund, recently admitted that China’s real estate bubble now manifests itself in 10. 7 billion square feet  (1 billion square meters) of unused housing! Min added that many housing stock go unused, and the market may see a significant price correction in the future, wiping out vast household wealth.

Guest Post: China Surpasses U.S. As Number One Global Trading Power

U.S. exports and imports last year totaled $3.82 trillion, the U.S. Commerce Department said last week. China’s customs administration reported last month that the country’s total trade in 2012 amounted to $3.87 trillion. China had a $231.1 billion annual trade surplus while the U.S. had a trade deficit of $727.9 billion. For those who are still not aware of why this is such a big deal, it is essentially a turning point moment in global trade.  There is no doubt that China will now be inducted into the SDR, and that their importance as a trade and consumption center will quickly lead to a move away from the dollar.  To put it simply, the dollar is going to lose its world reserve status VERY soon.  Many will cheer this change as necessary progress towards a more “globally conscious” economic system.  However, it’s not that simple.  Total centralization is first and foremost the dream of idiots, and in any mutation (or amputation) there is always considerable pain involved.  The proponents of this “New World Order” (their words, not mine) seem to have placed the U.S. squarely in their crosshairs as the primary recipient of this fiscal pain.

Daily US Opening News And Market Re-Cap: September 11

Equities traded lower in Europe today as market participants continued to book profits after a rally to 13-month highs on growing concerns that even though the Constitutional Court in Germany will dismiss the injunction, it may enforce certain conditions. In addition to that, yesterday’s comments from Spain’s Rajoy who said that the new ECB backstop makes a bailout for his country less urgent. As a result, there is a risk that markets may scale back their expectations of an imminent full-scale bailout and in turn lead to another speculative attack on Spanish bonds. This, together with touted profit taking, saw the short-end in Spain and Italy come under pressure (2y Spanish yield up 8bps and 2y Italian yield up 7bps). In turn, this supported duration assets throughout the session. Looking elsewhere, the looming elections failed to deter investors from the latest DSL tap, which drew a record low yield. Going forward, the second half of the session will see the release of the latest Trade Balance data from the US, as well as the weekly API report. In addition to that, the US Treasury will sell USD 32bln in 3y notes.

The $700 Billion U.S. Funding Hole; Desperately Seeking A Very Indiscriminate Treasury Buyer

Economics 101: when supply is greater than demand, prices fall; when supply is $700 billion greater than demand, prices plunge. An in-depth look at the supply-demand mismatch of the 2010 US Treasury market demonstrates that the truth is much worse than you may think, and why Bernanke's first act upon reconfirmation will likely be the announcement of the second part of Quantitative Easing.

Another Gold Bull Emerges: Hermitage Capital, And The Fund's 2010 Predictions

Earlier we presented a very bearish piece on Emerging Markets from UBS. Now we present a somewhat opposite view from Hermitage Capital Management, which does not share quite the bearish sentiment on EM's but rather is very bullish on "frontier" markets: Kazakhstan, Saudi Arabia, Abu Dhabi, Lebanon and Nigeria. One interesting observation from Hermitage when asked which currency to own: "The answer is none of the developed market currencies...If the supply of fiat currencies is changeable at the whim of government policy, while the supply of gold or oil is fixed by the physical limitations on new production, which would you rather own as a store of value? The answer seems pretty clear to us. You want to own the commodities because they are insulated from the actions of vote-seeking politicians and their amenable central bankers who in our view will carry on in debasing their currencies." Can we get a Gold, B#@$&*s?

Sleighrunning: December 20

  • GM is reportedly looking at "all offers" for Saab. (Apparently only unrealistic offers have been entertained hitherto). [dow jones]
  • Dutch automaker Spyker: "Hey, we'll bid."  GM: "Anyone... anyone at all?  Bueller...?  Bueller...?" [marketwatch]
  • China's Zhu Min: "The world does not have so much money to buy more US Treasuries." (Current account woes. Who knew?) [shanghi daily via drudge]
  • Iranian troops lower flag and withdraw from Iraqi claimed oil well. (Iranian theft of U.S. egg nog shipment to troops suspected).  [reuters]
  • In Russia, judo throws you.  (Do not fuck with judo black belt Putin.  Period.)  [reuters]

The Dark Gray Swan: No More Foreign Dollars With Which To Buy US Treasuries

Could the next black/green/dark gray swan be so obvious that it has avoided everyone? Well, except for the deputy governor of the Bank of China, who just gave the world a startling reminder of economics 101, when he said that it is "getting harder for governments to buy United States Treasuries because the US's shrinking current-account gap is reducing the supply of dollars overseas." Oops.

Bank Of China Representative: "The Real Economic Crisis Is Just Starting"

Interview with Zhu Min, Bank of China Vice President:

Q. Is overconfidence the biggest risk to the recovery?

A. It's not only overconfidence, it's overmyopic: Wall Street feels the crisis never happened. It seems to me the financial crisis is not over yet, but it has stabilized from a cliff drop. That's one thing. The real economic crisis is just starting.