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A Chinese Mega City Is On The Verge Of Bankruptcy

Tyler Durden's picture


While most "developed world" people have heard of Hong Kong and Macau, far fewer have heard of China's province of Guangdong, which is somewhat surprising. With over 100 million people, a GDP of nearly $1 trillion - the biggest of all Chinese provinces, this South China Sea adjacent territory is perhaps China's most important economic dynamo. One of the key cities of Guangdong is Dongguan, which as the map below shows is a stone's throw from Hong Kong, has a population of nearly 10 million, and has long been considered Guangdong's boomtown and one of China's richest cities.

One notable feature about Dongguan is that it is home to the New South China Mall, which is the world's largest. It also happens to be mostly empty ever since it opened in 2005. Which perhaps is a good segue into this story. Because while for the most part the city of Dongguan has been a story of prosperity, a wrinkle has appeared. According to the South China Morning Post, which cites researchers at Sun Yat-sen University, this city is now on the brink of bankruptcy.

Make that a big wrinkle.

The irony, of course, is that as always happens, while everyone has been expecting the muni collapse to take place in the good old US of A, it may be about to strike with a great vengeance and furious anger none other than that credit black hole, in which nobody really knows who owes what to whom, China.

How is it possible that a city which as the SCMP describes was once a backwater farm town until the late 1980s, and then as China boomed was transformed into one of the most important hi-tech manufacturing centres in the world, and about which an IBM vice-president famously said a mere 15-minute jam on the expressway there would be enough to cause worldwide fluctuations in computer prices, could be facing bankruptcy?

The answer is an absolutely fascinating story, one which for the first time exposes what could be the most sordid underbelly of the broken Chinese shadow credit system, and which demonstrates very vividly just what the hard Chinese landing will look like. It also explains precisely what the real creditor-debtor relationships are like in a country in which the banks are the equivalent of government entities, and which do little if any retail crediting in a time when the government is set on contracting the money supply at the wholesale, if not at the bank level (recall the now daily reverse repos conducted by the PBOC).

Most importantly it reveals the monetary dynamic "on the ground" - one which is vastly different than the one in the "western world."

The question is whether the story of Dongguan is an isolated one. Alas, just like there is never one cockroach, we are confident that many more such provinical centers are currently undergoing the same challenges, which if unresolved would lead to a tsunami of municipal, county and city level defaults, that would leave China in ashes.

Ironically, Meredith Whitney may have had the municipal default theme right. She was just envisioning the wrong continent...

From SMCP:

Boom city Dongguan faces bankruptcy

Dongguan's derelict factories and huge deficits send chilling warning to a China in slowdown

After three decades of spectacular growth, Guangdong's boom town of Dongguan is on the brink of bankruptcy.

Up to 60 per cent of its villages are running up deficits and will soon need a bailout from the township, researchers at Sun Yat-sen University have discovered.

It is a dramatic turn of fortune for Dongguan - one of the richest cities in China - and could foreshadow a wider fiscal crisis as the country's economy cools.

Local government debt hit 10.7 trillion yuan (HK$13.16 trillion) nationwide at the end of 2010, equivalent to about 27 per cent of gross domestic product. Credit rating service Moody's estimates the actual figure could be about 14.2 trillion yuan.

Bai Jingming, a senior researcher at the Ministry of Finance, estimated in 2009 the total debt of village authorities could total 10 per cent of the country's GDP, but there is no official data.

Bai said many village chiefs he interviewed had no idea how much debt they had. Yet their failings could bring serious political and financial instability at higher level government right down to the grass roots.

Experts have found Dongguan's village debt woes stem from two factors: a tightly-bound landlord economy, plunged into crisis by failing factories in the global downturn, and political pressure on local village chiefs to pay generous "dividends" to voters under the immature rural election system.

"The financial problems of the villages are much more serious than expected," said Shao Gongjun, the owner of a printing company who blogs on Dongguan's economy. Shao attributed much of the crisis to the local authorities' dependence on rental incomes.

A backwater farm town until the late 1980s, as China boomed Dongguan was transformed into one of the most important hi-tech manufacturing centres in the world.

An IBM vice-president famously said a mere 15-minute jam on the expressway there would be enough to cause worldwide fluctuations in computer prices.

As industry thrived, the population swelled from 1.8 million in the '80s to more than eight million. Most of the peasants cashed in and built matchbox homes on their land, letting the flats to migrant workers. Village authorities leased community land to factories and collected rent as their main source of income.

This worked perfectly until the recent downturn. Shao said many factories had either closed or moved out over the past five years to inland provinces with lower costs.

The number of Hong Kong-backed factories has dropped by 15 per cent since 2007. As factories and migrant workers left Dongguan, rents nosedived.

"I'm so worried that before long I will lose my tenants and the flats would be left deserted," said a 61-year-old woman surnamed Luo. She put together two million yuan from her life savings 10 years ago and with bank loans built a six-storey apartment building in Luowucun in Zhangmutou county. Her family occupied the first floor and let the rest out to migrant workers.

Luo used to collect about 15,000 yuan a month in rent - nearly 10 times what an average worker earned. But rents have dropped by a third since 2007.

The fall in rental values forced 60 per cent of the 584 villages in Dongguan into budget deficits, the study by Professor Lin Jiang of the finance and taxation department of Lingnan College at Sun Yat-Sen University found.

Lin's estimate is based on a study of 30 villages in relatively well-off counties, such as Tangxia, Houjie and Humen, in May.

The figure may not reflect the whole picture, but it gives a good snapshot of the problems authorities face.

"They are in deficit because their incomes are shrinking while their expenses are going up," Lin said.

This is an unexpected sideeffect of China's fledgling grass-roots democracy.

While competitive elections are still absent at almost all levels of government, Beijing has started to let villages choose their leader through universal suffrage. These elections have been getting increasingly competitive, and candidates often promise to pay generous "dividends" to villagers to attract votes.

"In some rare cases, the leader-elect promised to give each household 10,000 yuan per month," Lin said. The money would come from the village community "investment" - effectively, the rent they collected from factories.

Lately, village chiefs have found it difficult to fulfil such election pledges. But instead of reneging on their promises and sparking the anger of villagers, they turn to the rural credit co-operatives - the de facto local banks - for short-term loans at interest rates as high as 30 percentage points.

Banks are willing to lend, because they know that the township government would have to bail villages out if things go wrong.

"Some village leaders are now really worried that the bank may come to call in the loans," Lin said. "If the villages default, the burden would be transferred to the county or the township government."

The Dongguan government is in poor shape to handle a crisis. Its GDP growth slowed to 2.5 per cent in the first half of the year. The average growth in the past eight years was about 11 per cent.

Xu Jianghua, Dongguan's party secretary, urged villages last month to stop raising money to pay dividends. Few took heed.

Village chiefs may argue paying dividends are not the sole cause of their debt. They also have to pay for local fire and police services - even though these are supposed to be the local government's responsibility.

For years, the township government underinvested in such services, knowing they would be taken care of by the cashed-up village authorities.

Eddy Li, president of the Hong Kong Economic and Trade Association, said in some counties police would refuse to investigate a crime unless it involved more than 20,000 yuan.

Shao estimated Zhangmutou county authorities alone have accumulated a total of 1.6 billion yuan in debt. Annual revenue is only 600 million yuan.

Shao said the Dongguan government needs structural reform to end its reliance on rental income. He proposed the township give residency to migrant workers so they can contribute more to the local economy.

"Without a radical change in the social structure, the economic transformation will never succeed," he said.



And some pictures from the city that may soon be the first cockroach observed once the light was truly shone:



A row of empty shops that have been idle for more than nine months – a common sight in what was once a hi-tech heartland. Photo: May Tse

Commercialism came storming into rustic residential areas. Photo: May Tse

Boarded up shops in the suburbs of Zhangmutou. Photo: May Tse

Many roads but few cars in the once desirable district of Zhangmutou, a favourite with expats and retirees. Photo: May Tse


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Thu, 09/27/2012 - 18:37 | 2836989 ebworthen
ebworthen's picture

The 10 million people might be part of the problem.

How many happy meal toys and plastic pet crap does the West need?

Thu, 09/27/2012 - 18:51 | 2837020 Cognitive Dissonance
Cognitive Dissonance's picture

Ummmm........more than yesterday and less than tomorrow?

Wait, did you say need or want?

Thu, 09/27/2012 - 18:58 | 2837033 Precious
Precious's picture

Chinese Mega City?  For a minute there I thought you meant Irvine, California.

Thu, 09/27/2012 - 19:18 | 2837081 knukles
knukles's picture

Mega City Chinese Style
All buildings, no people



no tickie no laundry shit all over again, part II

Thu, 09/27/2012 - 19:47 | 2837152 Pure Evil
Pure Evil's picture

And, to think, just the other day they showcased their refurbished Ukranian aircraft carrier-sans any aircraft.

What's happening to my beautiful world.

Thu, 09/27/2012 - 20:30 | 2837242 Ahmeexnal
Ahmeexnal's picture

What did you expect from a city called "Don Juan"?

Thu, 09/27/2012 - 22:13 | 2837446 Pool Shark
Pool Shark's picture



Yeah, looks like the Chinese citizens "Don Juan" it around...


Fri, 09/28/2012 - 03:03 | 2837821 AldousHuxley
AldousHuxley's picture

Chinese copied everything including bankrupt public financing policies.


Vietnam is where it is at these days in terms of slave labor.


In the future north korea.

Fri, 09/28/2012 - 03:37 | 2837855 prains
prains's picture

and after that Manhattan

Fri, 09/28/2012 - 06:58 | 2837990 markmotive
markmotive's picture

China: Communism without the benefits...

Child drags mother through the street to beg

Fri, 09/28/2012 - 00:25 | 2837687 dbomb12
dbomb12's picture

Guandong is that anywhere near Longdong

Thu, 09/27/2012 - 21:23 | 2837346 toady
toady's picture

Just wait until they default on the unions pension fund. Those damn public sector pukes are gonna riot!

Fri, 09/28/2012 - 02:31 | 2837797 Daily Bail
Daily Bail's picture

Our day of default is coming soon enough.

When you read this story, remember that we borrow 42 cents of every dollar we spend.

Taxpayers Spent $1.4 Billion On Obama Family Last Year

Thu, 09/27/2012 - 19:46 | 2837153 saturn
saturn's picture

Buildings are people.

Thu, 09/27/2012 - 19:48 | 2837156 Bobbyrib
Bobbyrib's picture

Did the Supreme Court have another ruling?

Thu, 09/27/2012 - 20:10 | 2837206 nmewn
nmewn's picture

Yes...they decided the fine is really a tax. Apparently, because there is no way to escape a fine unless you buy something.

We used to call this extortion.

Thu, 09/27/2012 - 20:34 | 2837253 fourchan
fourchan's picture

the bigger they are the harder they fall

Thu, 09/27/2012 - 21:00 | 2837301 kaiserhoff
kaiserhoff's picture

Careful my friend.  Public display of sanity may piss off Grindel.

Thu, 09/27/2012 - 21:23 | 2837348 yrbmegr
yrbmegr's picture

These days, we call it a mortgage.

Fri, 09/28/2012 - 07:28 | 2838032 fockewulf190
fockewulf190's picture

"Buildings are people."

I see dead buildings.

Thu, 09/27/2012 - 19:50 | 2837160 dryam
dryam's picture

Two words....

Hugh Hendry

Thu, 09/27/2012 - 21:15 | 2837331 Freddie
Freddie's picture

Jim Chanos too.   I love the scenic drainage ditch aka river.  Looks like some craphole in Calli-Porn-Ia like Venice.  The shiity shops with living hovel above the shop looks like crap house in San Fran-psycho. 

Sat, 09/29/2012 - 13:56 | 2841748 Kobe Beef
Kobe Beef's picture

I am dumbfounded. Corrupt governors buying votes with public funds, then buying foreign cars, shipping their sons off to Harvard and Oxford. Millions taking loans they can't afford and pretending they are rich. Then when shit hits the fan, everybody blames Japan and loots Rolex and Christian Dior..

I don't get it. Have we been lied to again? Are the Chinese niggers? Is this kind of systemic fraud, jive, bubblepop and tantrum what AnAnonymous means by US citizenism? If that is so, he has reason to be concerned. I thought they were smarter than this. What happened to ethics, principles and standards? Are they as eroded there as they are here?

I know lots of overseas Chinese, and they are smart, capable, hardworking people, even their daughters. I thought the mainlanders were similar. Am I wrong?




Sun, 09/30/2012 - 14:39 | 2843276 _ConanTheLibert...
_ConanTheLibertarian_'s picture

also Patrick Chovanec and China Law Blog. Have been following them all for some time. I've been short China for months and will hold on.

Thu, 09/27/2012 - 21:17 | 2837336 Withdrawn Sanction
Withdrawn Sanction's picture

All buildings, no people

The Texas translation would be "all hat and no cattle."

Thu, 09/27/2012 - 22:10 | 2837442 RiverRoad
RiverRoad's picture


Maybe they'll rethink that one-child policy.


Thu, 09/27/2012 - 20:21 | 2837229 FubarNation
FubarNation's picture

I thought Vancouver, BC Canada.

Thu, 09/27/2012 - 20:32 | 2837249 Ahmeexnal
Ahmeexnal's picture

On a similar note, the largest Vietnamese city, San Jose CA, is also in trouble.

Thu, 09/27/2012 - 21:09 | 2837320 mr. mirbach
mr. mirbach's picture

Chairman Mao's push to become Westernized has reached it's peak - strangely enough at roughly the same time as California cities...New defiintion of westernized in the making - something along the lines of the ponzi scheme getting unsustainibly top heavy.

Fri, 09/28/2012 - 01:11 | 2837739 Skateboarder
Skateboarder's picture

We have the best Pho places here. Come check 'em out sometime.

Thu, 09/27/2012 - 21:39 | 2837385 conspicio
conspicio's picture

Agenda 21 in action, Bitchez. China is like a time accelerator of economic and central planning cycles. You are peering into the future and it is merely a movie set. A movie set. A movie set. A movie set. Damn echo. I bet all their doorbells go Dong Dong, cause hey, if I wanted to design that trickery it'd be standard issue for these pimped up hoods of vacancy and predeliction.

Thu, 09/27/2012 - 20:41 | 2837268 californiagirl
californiagirl's picture

Irvine is not the only one in big fiscal trouble.  Just wait until the hangovers from all the CABs (Capital Appreciation Bonds) issued in California in recent years (many underwritten by Stone & Youngberg who wine and dine the public officials) hit the taxpayers and municipal and school district budgets throughout California.  Now that the Poway voters know how badly they have been duped by their elected officials, having been tricked into the equivalent of a reverse amortization, subprime, Ponzi bond from hell with no early redemptions allowed, that requires them to repay almost $1 billion on borrowings of $105 million (that is more than $20,000 for every man, woman and child in Poway), they are starting to wake up and the word is slowly spreading.  However, there will be a large list of bonds rushed through on November's ballots in California, many of them probably CABs so they can kick the can down the road. I imagine the politicians are in a rush to get these through before the CAB taxpayer ripoffs go viral, or hell freezes over and the MSM actually begins reporting on it effectively. 

It would be great if the Tylers and ZeroHedge readers would help the CAB scams go viral before the election. California is not the only one using this method to rip off taxpayers.  You all should worry about what is happening here in California because we are syphoning off a lot of federal taxpayer dollars for our spending binges.  For example, most of the funding for the bullet train will be Federal and the first $3.4 billion federal taxpayer money has already been grabbed to start the building of the track from nowhere to nowhere (Fresno to Bakersfield). You would think they would at least start in a busy traffic corridor.   I wouldn't be surprised if they will have used well over a hundred billion in federal taxpayer dollars on this travesty by the time the first phase is completed in 2028.  What major Caltans project ever came in anywhere close to budget?!  Heck, maybe the bullet train project will lose funding from angry taxpayers before it ever gets to construction in a major corridor and all we get is expensive rail in the desert.

One of my friends is the one that that investigated the Poway school district bonds and actually got a newspaper to publish it.  Now there is an effort to get CABs banned in California.  She also works for the SEC but is one of those who is too busy to watch porn because she is actually going after crooks. The Poway/CAB thing was on her own time.  Not everyone at the SEC is useless.

Here are the articles:

Thu, 09/27/2012 - 21:29 | 2837364 Withdrawn Sanction
Withdrawn Sanction's picture

Not everyone at the SEC is useless.

Perhaps not, but she sounds like the exception that proves the rule.

As for the crooks who think they've pulled a fast one, two points:  (1) a debt that cannot be paid, wont be (a billion on $105 million...really?  I guess if you're going to steal, steal large), and (2) a legislature, by definition, writes (and can unwrite) rules/laws.  It can just change the terms of the contract, and everyone knows, contracts are nothing special anymore....the GM "bankruptcy" proved that, as did AIG, BS, LEH, ML, PFG, MFG....  

And should no. 2 fail, see no. 1.

Thu, 09/27/2012 - 21:42 | 2837395 californiagirl
californiagirl's picture

True. However if we just stop trying, then it will only get worse.  We need to get off our buts and do something. Educating the uneducated masses and waking people up is at least a move in the right direction.

Fri, 09/28/2012 - 01:53 | 2837769 vato poco
vato poco's picture

A noble goal, but it just ain't gonna happen. You can buy your own TV station; buy your own newspaper; start your own website......pointing out, showing, *proving* to Californians how their elected scum teamed up with the banksters to buttfuck the taxpayers. You can put up billboards, run ads on every radio station 24/7.

And they'll still go 65%+ Democrat in every elction, and re-elect the same scum who gleefully & openly screw 'em. (It ain't like they're even trying to hide it anymore, is it.)("Bend over, bitchez! Here it comes again! If you don't like it, tough shit!") It's gonna get worse whether you try or not. At some point, you gotta realize the tide's going to come in no matter how hard you fight it. Gravity's _always_ gonna win. Just get out! Save yourself and your loved ones!

Fri, 09/28/2012 - 01:54 | 2837777 californiagirl
californiagirl's picture

Except that my friend managed to get a CAB cancelled in her own home town, replaced by conventional revenue bonds, thus saving the taxpayers lots of money while pissing of the School Board and the underwriters. Yup! Getting of your butt and attempting to do something is completely useless.

Fri, 09/28/2012 - 02:56 | 2837816 The Navigator
The Navigator's picture

When the shit hits the fan, we're all gonna wish we bought a bigger fan - 'cus when the shit comes, it'll be by boat loads.

Latest CA BK case coming is Atwood CA, reported earlier in the week on the ZH channel.

Meridith Whitney was right, but timing a bit off - muni debt collapse coming and 2013 should show either the tsunami forming or approaching land.


Fri, 09/28/2012 - 03:32 | 2837849 vato poco
vato poco's picture

You're not looking at the big picture, Darlin'. There may be a few isolated successes here & there, but in the main....Compare CA 1989 to CA today. The schools - better or worse? The State Reserves - better or worse? State budget? Tax rates? Tax base? Employment? Number of people on welfare/food stamps? Number of government employees/leeches? Business starts? Businesses leaving the state? Central Oakland? Santa Ana? Westminster? Long Beach? Traffic? Bakersfield? Stockton? The # and aggressiveness of the bums in Frisco? The Central Valley? etc etc

Hell, had to spend some time recently in Orange Cty and Santa Barbara - 2 of CA's richest and (theoretically) best run counties. Garbage not picked up off the freeway; 5-ft high weeds by the side of the freeway; the potholes quick-&-dirty patched if patched at all. In areas that were once absolute **showcases** for CA. When a high tide comes in, invariably, there are spots on the beach the tide seems to be missing: high ground, lucky spot, a fluke of fluid/tidal dynamics, whatever. But eventually, the tide wins and covers it all. Everything. The tide *always* wins. "Probability is like gravity - you can't negotiate with it." - James 'Sonny' Crockett

Fri, 09/28/2012 - 15:41 | 2839854 californiagirl
californiagirl's picture

Oh, I get the big picture, Sugar.  I just think that a few small victories are better than zero small victories. If more people got off their asses instead of whining, we might have a few more of them.  And if any of those small victories have a positive effect on my pocketbook, then all the better.

Sat, 09/29/2012 - 14:07 | 2841769 Kobe Beef
Kobe Beef's picture

I'm glad your friend fought the parasites and WON. In the long run, maybe there are enough true California patriots to derail the grand socialist train to bankruptcyville. Keep Fighting!


Sun, 09/30/2012 - 20:12 | 2843774 Angus McHugepenis
Angus McHugepenis's picture

"Educating the uneducated masses and waking people up is at least a move in the right direction".

I love reading your comments but have you seen the video of the Clevland woman about the Obama phone that's been posted all over ZH comments recently? I wish you luck trying to educate and wake up morons like that. Your time is far more valuable than wasting your breath on those brainwashed idiots. Folks as dumb as that are simply a lost cause. Take care of your own and educate your immediate family and friends. And take time out for yourself. I have bankers in my immediate family. Last time I talked to anyone in my family was 8 years ago.

The only advantage of having bankers in your family is that even after years of not seeing them they will still recognize you. It gives you an advantage to get close enough to them without setting off their justified paranoid alarm bells to wring their fucking necks and leave them semi-comotose on the sidewalk.

Just want to give a "shout out" to my bro... who shall remain nameless for now. And FUCK YOU, you scumbag banker!

Fri, 10/26/2012 - 21:42 | 2923246 ronaldawg
ronaldawg's picture

Am from CLE Ohio - have "special" type of neegro there - don't judge people by those cartoon characters living in the "mistake by the lake."

Fri, 09/28/2012 - 08:31 | 2838139 unrulian
unrulian's picture

It actually makes more sense to use payday loans

Thu, 09/27/2012 - 22:04 | 2837432 RiverRoad
RiverRoad's picture

They don't call CA a bellweather state for nothing:  Could that bullet train be the 2nd Great Depression's modern version of a Work Program???

Thu, 09/27/2012 - 22:22 | 2837467 californiagirl
californiagirl's picture

Sure, but a huge chunk of the money is going to import the materials and trains from overseas, creating jobs elsewhere.  At least in the Depression they used mostly made in USA materials.

Thu, 09/27/2012 - 22:50 | 2837504 californiagirl
californiagirl's picture
Patterson Unified, located in Patterson, California, sold a $77,500 CAB that will cost taxpayers $8 million ... 105 times par!  The Hartnell Community College District sold a $167,000 CAB that will cost $14 million. Poway's $105 million CAB offering was packaged into 11 mini bonds, the worst one being a $13.9 million CAB that will cost $321 million.  Apparently, there are already laws in California that would prohibit the sale of CABs if the law was not being violated. Specifically, Education Code 15146(e) states that bonds may be sold at a discount not to exceed 5%. Poway's CABs sold at discount rates as high as 94%.  Case law (Golden Gate Bridge vs. Filmerrequires public officials to obtain the best financial terms for bonds (cited by the California Attorney General in his opinion 06-1102).  Schools can sell bonds under the Government Code...but this code says if the bonds are sold on a "Negotiated," private basis, then the bonds must follow the conditions of Education Code 15146. Michigan banned CABs by prohibiting the sale of bonds at discounts exceeding 10%.
Thu, 09/27/2012 - 22:40 | 2837492 Deathrips
Deathrips's picture

I grew up in Scripps. Poways the back yard. Canary in the coal mine. California is bust. Government here spends cash on nonsense. I would elaborate....but it pisses me off. Doug Manchesters paper publishing this...and still no attention. Retarded. Guess when theyre all drunk at the keg party..they forget somones got to pay for the next keg.

Silver mo fo.


Thu, 09/27/2012 - 23:13 | 2837552 stocktivity
stocktivity's picture

C'mon Tylers ...If this is true, it's worthy of a story before elections.

Thu, 09/27/2012 - 23:22 | 2837566 californiagirl
californiagirl's picture

Thanks! :-). I think so. I have been a long-time fan of ZH and a story would make one Californian that still has some functioning brain cells very happy!

Fri, 09/28/2012 - 00:51 | 2837711 Yen Cross
Yen Cross's picture

 Cali Girl.  

   Speak with athorita/ cartman style.   Secondly, you are not a literary major/minor.  Third and most important, "KISS" you all over.

 " Keep It Simple Stupid"

   Irvine is the "MOTHER of UCSD"! Hell I use that Heliport off Torry Pines, once in a while!  Get creative!


Fri, 09/28/2012 - 01:11 | 2837737 tickhound
tickhound's picture

Torrey Pines, Yen.  Left my 9-iron there on my last government junket.  I was raising money for the war-effort.

Fri, 09/28/2012 - 14:09 | 2837753 californiagirl
californiagirl's picture

You are correct. I am not a literary major/minor. I don't worry about my literary style and grammatical accuracy when writing a response on an informal blog as opposed to drafting language for a legal document. I have a very useful degree in a highly employable field, have never been unemployed since I was 16, and had multiple job offers before I graduated. I can also be a Power Point queen for those with ADD. However, I find that detail is useful when discussing fiscal mismanagement or fraud and is more difficult to refute and/or dismiss. That is one of the reasons I like ZeroHedge so much - excellent and detailed explanations.

Also, I didn't realize there where Stupid people reading ZH that need me to keep it Simple.

Fri, 09/28/2012 - 01:55 | 2837771 vato poco
vato poco's picture

Wait....Yen Cross, the guy who routinely pens the most bizarre, non-sequitur, non-linear, free-association garbled nonsense/bullshit ever seen here - possibly written in a foreign language run through a bad freebie translation program.....dares to criticize Caligirl's perfectly adequately written (at the very least) and to-the-point commentary?

How very ironic.

Thu, 09/27/2012 - 20:47 | 2837283 Freddie
Freddie's picture

Dong Juan is MexiFronicate with fewer Mexicans and slightly more Asians.  Just as corrupt and just as crony commie like Kallie-Porno-cation.

Thu, 09/27/2012 - 21:11 | 2837322 CheapBastard
CheapBastard's picture

The County of Orange has about $4 Billion in unfunded Pension and medical liabilities.  To put in perspective, Orange County’s budget is about $3.5 Billion.

Thu, 09/27/2012 - 23:31 | 2837587 californiagirl
californiagirl's picture

If any of you readers live in the OC, you better watch out for pension obligation bonds or you might end up like Oakland, which increased it's unfunded pension obligation by $250 million due to a bad bet on a pension obligation bond scheme.

Thu, 09/27/2012 - 23:44 | 2837606 Arnold Ziffel
Arnold Ziffel's picture

I have a friend who just bought a 'little place' in the Laguna area....a little place, that is, for $1 million.


Seems still overpriced to me.

Fri, 09/28/2012 - 00:18 | 2837673 dbomb12
dbomb12's picture

My condolences to those that live in Cali.

Fri, 09/28/2012 - 01:38 | 2837683 californiagirl
californiagirl's picture

Not to mention the $5 million a year that Oakland is paying the Squid (while they lay off police) for an interest rate swap they chose not to unwind after paying off the underlying bonds. Interestingly, Jerry Brown was mayor of Oakland when the unwind (which reportedly would have cost $15 million at the time) was rejected and his sister worked for the Squid in the municipal financing division. We all know that there is no possibility of conflict of interest or undue influence, of course, because Wall Street bankers and politicians always demonstrate highly ethical behavior and Chinese Walls are impenetrable. Earlier this year, before the Bernankster announced QE3, the cumulative payments to the Squid were estimated at $46 million. You don't suppose Brown would use any underhanded expensive financing tricks to balance California's budget, now would he?


Thu, 09/27/2012 - 19:54 | 2837172 Neethgie
Neethgie's picture

Trading floors are littered with the bodies of those who dared to think the west would cease wishing to buy happy meal toys and plastic trash.

Thu, 09/27/2012 - 21:31 | 2837367 Withdrawn Sanction
Withdrawn Sanction's picture

Eat a lot of 4-piece McNuggets on the trading floor, do they?

Thu, 09/27/2012 - 21:07 | 2837318 CheapBastard
CheapBastard's picture

So who is going  to report how much was sequestered by local gubbermint officials and RE developers and quietly carried out of the country to secret offshore accounts ?



Thu, 09/27/2012 - 23:47 | 2837613 Arnold Ziffel
Arnold Ziffel's picture

CB, it's funny how the Chinese "secret offshore accounts" are here in America (as well as HK and Canada) where the banks do not report to foreign governments...


Of course, they welcome the money, hot or not.

Sat, 09/29/2012 - 02:59 | 2841186 Buck Johnson
Buck Johnson's picture

I know, I know.

Thu, 09/27/2012 - 18:39 | 2836990 nope-1004
nope-1004's picture

I have a solution:  Print municipal bonds, sell them to the other arm of the govvy, redeem at 1/10 the price, raise taxes, and do this 'open-ended'.

Then, change how "vacancy" is defined.  Once a store is vacant more than 6 months, it's no longer counted as a location.

Vacancy rates will rise, municipal balance sheet repaired, and no one knows nuttin'!  Glad I'm the first to think of it.


Thu, 09/27/2012 - 19:36 | 2837123 SilverIsKing
SilverIsKing's picture

With all the fortune cookies, I guess "who coulda saw it coming?" Is not a viable excuse.

Btw, vacancy rates would fall if vacant supply fell out of the calculation, no?

Thu, 09/27/2012 - 22:46 | 2837503 nope-1004
nope-1004's picture

Yes, you are correct.  My error.


Thu, 09/27/2012 - 19:59 | 2837182 Oquities
Oquities's picture

even better - sell trillions of t-bonds at 1.8%, drive rates up to 10%, then buy them back at 40 cents/dollar with newly "printed" money.

Thu, 09/27/2012 - 20:10 | 2837205 FreedomGuy
FreedomGuy's picture

Create their own Chinese Fed who will buy all the bad MBS and add liquidity to the system. Build stuff, even empty buildings to support good GDP numbers and get the economy roaring. Finish off with keynesian champagne party. Invite Ben Bernanke as guest speaker.

Sat, 09/29/2012 - 09:26 | 2841358 Redhotfill
Redhotfill's picture

Can Asians grow beards like the Bernanke?

Fri, 10/26/2012 - 21:47 | 2923254 ronaldawg
ronaldawg's picture

Yeah - just like BLS did to get to the 7.8% unemployment rate.

Thu, 09/27/2012 - 18:36 | 2836991 Debtonation
Debtonation's picture

Looks like Detroit.

Thu, 09/27/2012 - 18:52 | 2837023 SemperFord
SemperFord's picture

Naw, this place has to have less crime and hot Asian chics like...

Thu, 09/27/2012 - 19:53 | 2837168 mayhem_korner
mayhem_korner's picture



Do they have "UStown" sections in China's major cities...? 

Thu, 09/27/2012 - 20:34 | 2837251 Ahmeexnal
Thu, 09/27/2012 - 21:27 | 2837357 conspicio
conspicio's picture

nononono "lound eye virrage"

Fri, 09/28/2012 - 02:55 | 2837815 akak
akak's picture


Thu, 09/27/2012 - 20:52 | 2837290 three chord sloth
three chord sloth's picture

Hey, at least Detroit has an excuse -- it's old and worn out. All of those rust-streaked buildings in these photos are less than 30 years old. They've all been built since the 80s.

Thu, 09/27/2012 - 21:22 | 2837343 Freddie
Freddie's picture

I bet they are newer than that.  I would love to check out the ghost towns and apts over time.  Some of them look nice but empty nicer apts are going to decay pretty quickly.  

Thu, 09/27/2012 - 18:38 | 2836996 LMAOLORI
Thu, 09/27/2012 - 19:48 | 2837157 saturn
saturn's picture

It's Bush's fault!

Thu, 09/27/2012 - 18:39 | 2836999 drink or die
drink or die's picture

"This worked perfectly until the recent downturn. Shao said many factories had either closed or moved out over the past five years to inland provinces with lower costs."


Ain't that a bitch.

Thu, 09/27/2012 - 19:20 | 2837084 knukles
knukles's picture

new meaning to off/in-shoring


Thu, 09/27/2012 - 20:50 | 2837289 Freddie
Freddie's picture

Some other Chinaman stole that chinaman's job.  Maybe they moved south for cheap hillbilly labor.

Fri, 10/26/2012 - 21:51 | 2923263 ronaldawg
ronaldawg's picture

That's weird because I just saw on PBS a show indicating that China was self-sufficient in food and may even be exporting....

Thu, 09/27/2012 - 18:40 | 2837000 Yen Cross
Yen Cross's picture

ebworthen       A smart person like yourself is probably aware of this. Non the less, your comment was spot on.

  Check this out.

  That should eradicate any argument pertaining to your question. ;-)

Thu, 09/27/2012 - 20:04 | 2837196 knukles
knukles's picture

JIT inventory

Thu, 09/27/2012 - 20:17 | 2837220 Yen Cross
Yen Cross's picture

Slewie lives on!

Thu, 09/27/2012 - 18:42 | 2837002 Cognitive Dissonance
Cognitive Dissonance's picture

Well.....if China can't save us from ourselves who can?

Hint: Look within.

Thu, 09/27/2012 - 19:32 | 2837116 Dr. Engali
Dr. Engali's picture

Aliens from the planet &#*^~£€#! will save us.

Thu, 09/27/2012 - 19:50 | 2837163 Pure Evil
Pure Evil's picture

Even the esteemed Dr. Krugman recommended it.

Thu, 09/27/2012 - 20:55 | 2837293 three chord sloth
three chord sloth's picture

Eww... all I see is blood and viscera.

Thu, 09/27/2012 - 18:42 | 2837004 crusty curmudgeon
crusty curmudgeon's picture

Economic freedom is such a simple concept.  If only people could...

What's Lindsey Lohan doing these days?

Thu, 09/27/2012 - 19:14 | 2837071 GeezerGeek
GeezerGeek's picture

Personal responsibility is such a simple concept. If only people could...but then Obama wouldn't have a constituency.

Thu, 09/27/2012 - 18:44 | 2837008 Landrew
Landrew's picture

At first I thought, Wow how shocking! Then, of course what isn't bankrupt everywhere?

Thu, 09/27/2012 - 19:57 | 2837176 mayhem_korner
mayhem_korner's picture



Everything is bankrupt...only few have declared it, tho.

Thu, 09/27/2012 - 20:14 | 2837215 FreedomGuy
FreedomGuy's picture

They cannot go bankrupt! The USA needs their money to keep us from going bankrupt! If they don't buy our bonds then grandma won't get her checks here!

Thu, 09/27/2012 - 18:44 | 2837010 surf0766
surf0766's picture

There is no bankruptcy in a communist country.

Thu, 09/27/2012 - 21:21 | 2837342 conspicio
conspicio's picture

Bankruptcy is merely an accounting exercise. No shits are given at PBOC about this debacle. Write off the debt and move on. They piss more than this away in Eurobonds every week. Besides they have people to squish, kill and maim. Get on with fucking important stuff already.

Fri, 09/28/2012 - 03:42 | 2837862 Zwelgje
Zwelgje's picture


Fri, 09/28/2012 - 00:19 | 2837674 fiftybagger
fiftybagger's picture

Does that make the Wall Street banks communist?

Silver For The People

Thu, 09/27/2012 - 18:46 | 2837011 Frastric
Frastric's picture

I'm having the feeling where shit is getting real...

If QE3 has been priced in fully this might be slightly bearish...

Thu, 09/27/2012 - 19:59 | 2837180 mayhem_korner
mayhem_korner's picture

"slightly bearish"


If you look at stock prices in terms of gold instead of fiat, you will see that there has been no bull in the picture for a dozen years.

Fri, 09/28/2012 - 04:30 | 2837907 Frastric
Frastric's picture

I know, actual DOW value priced in gold has very sluggish. Mind you the exponential growth of developed countries GDP from the 70s until the late 2000's was nothing more than inflation driven and with massive increases in money supply. Which explains why in Britain £100 in the 70's had about the same value as £10000 today.

The games up when inflation drives wages to their millions or hundreds of thousands if the inflation trend were to hold. When the average smuck realises he's a millionaire but confined to the same life style as before (purchasing power), then the penny will drop...

Thu, 09/27/2012 - 18:47 | 2837014 semperfi
semperfi's picture

what's the chinese symbol for ctrl-p  ?

Thu, 09/27/2012 - 19:16 | 2837076 GeezerGeek
GeezerGeek's picture

It's an ideogram consisting of two separate parts, one is a fan and the other is a smelly brown pile of something.

Thu, 09/27/2012 - 18:48 | 2837016 km4
km4's picture

Was Guangdong on Meredith Whitney's list and if not perhaps they use Vietnam's Dong as new currency because Dong is good ;)

Thu, 09/27/2012 - 21:32 | 2837294 Angus McHugepenis
Angus McHugepenis's picture

Long the Dong.

That is not investment advice.

Edit: I do short the schlong while sharting in the shitter.

Thu, 09/27/2012 - 21:24 | 2837350 erg
erg's picture

I said to a Vietnamese classmate that showed me his currency. "In Dong we trust."

He didn't get it but everyone else laughed.

Thu, 09/27/2012 - 18:56 | 2837026 Yen Cross
Yen Cross's picture

 Those must be "file photos"?  Shouldn't it be all "assholes & elbows" in China? /sarc

Thu, 09/27/2012 - 18:55 | 2837031 shovelhead
shovelhead's picture

It's dark in there...

Smells like last nights dinner too.

Thu, 09/27/2012 - 19:09 | 2837060 lostcause
lostcause's picture

 I'll never forget watching the 2008 Olympic Marathon on TV. I couldn't believe how many empty store fronts I saw as they were running by.  I would love to see what that area looks like today.

Thu, 09/27/2012 - 19:11 | 2837065 whoopsing
whoopsing's picture

I see there is still plenty of smog in the picture of empty highways,something is happening somewhere.....

Thu, 09/27/2012 - 19:13 | 2837069 Azwethinkweiz
Azwethinkweiz's picture

All of those boarded up shops look exactly like some of the storefronts all the way down Ventura Blvd. in Los Angeles, CA. Except, instead of being boarded up, there are FOR LEASE signs plastered on the windows.

Thu, 09/27/2012 - 19:14 | 2837073 Oquities
Oquities's picture

CNBC is REALLY cute right now - the jew larry kudlow is discussing the jew benyamin natanyahu's speech with the jews wesley clark and alan dershowitz - how objective!

Thu, 09/27/2012 - 19:24 | 2837098 Keyser
Keyser's picture

Larry Kudlow is Catholic...

Wesley Clark is Catholic

You did get 50% though. I wonder what gave it away. 


Thu, 09/27/2012 - 19:34 | 2837120 Oquities
Oquities's picture

wrong - clark's paternal grandfather was jewish, and kudlow was born into a jewish brooklyn family

Thu, 09/27/2012 - 19:44 | 2837149 Oquities
Oquities's picture

tho i sometimes get confused - what with the jews andrew ross sorkin, the former mark haines, scott cohn, jim cramer, david faber, hank greenberg, etc providing such diversity

Thu, 09/27/2012 - 20:47 | 2837282 Angus McHugepenis
Angus McHugepenis's picture

I'm a middle aged circumsized Irish male of dubious religious qualifications. I want to play the fiat game but nobody will let me into their sand box. Do I need to sell my Mother before I can participate?

Thu, 09/27/2012 - 19:42 | 2837140 kito
kito's picture

general clark comes from a long line of rabbis, just like obama.........and romney..........when they are both campaigning in boca raton.....................................

Thu, 09/27/2012 - 23:14 | 2837554 WillyGroper
WillyGroper's picture

Once there's a break in the bloodline barring the mother, it takes 7 generations to be considered a yid. What's with this?

Thu, 09/27/2012 - 19:21 | 2837086 kekekekekekeke
kekekekekekeke's picture

that mall is nuts

Thu, 09/27/2012 - 19:24 | 2837096 Dr. Engali
Dr. Engali's picture

So if it's like this in what used to be a prosperous city , I wonder what prevents the empty cities from going bankrupt.

Thu, 09/27/2012 - 19:29 | 2837111 Yen Cross
Yen Cross's picture

 The "Ghost Cities" are all of Chinas rehypothecated wealth, out in the open. /sarc

Thu, 09/27/2012 - 20:38 | 2837261 Angus McHugepenis
Angus McHugepenis's picture

100% of fuck-all is still fuck-all... zero, Bitchez

Bankers don't care about empty cities. There's nobody there to open the bank each morning. Therefore, no bankers = no bankruptcy = nobody gives a shit what happens.

I'm the "Amazing Kreskin" and I approve this message.

Thu, 09/27/2012 - 19:34 | 2837121 Keyser
Keyser's picture

No work, no reason to stay in the city. All the workers left for the provinces right after they got their last pay packet. No workers, no businesses, no city. 

Thu, 09/27/2012 - 19:37 | 2837126 The big unzip
The big unzip's picture

Maybe they should trade it for Japan's island.

Thu, 09/27/2012 - 19:41 | 2837136 knukles
knukles's picture

Them's fightin' words... it's their rock, not the Japs

Thu, 09/27/2012 - 19:40 | 2837133 Joebloinvestor
Joebloinvestor's picture

Would take some of the Japanese in fact may take whatever is left after they admit the island is doomed.

Thu, 09/27/2012 - 19:43 | 2837145 KickIce
KickIce's picture

Or as Bobby Bowden would say,

Dong guan it, we're broke.

Thu, 09/27/2012 - 19:44 | 2837147 Yen Cross
Yen Cross's picture

 On a serious note. lot's of news out of Asia shortly. Here's a calendar.

Thu, 09/27/2012 - 19:48 | 2837155 bugs_
bugs_'s picture

Dongguanit Mr. President!  We must not allow a MegaCity Gap!

Thu, 09/27/2012 - 19:59 | 2837181 kedi
kedi's picture

China is like a lost giant buried unexploded bomb. Actually a whole bunch of them. The blend of unbridled corporatism, corruption, population and military, all expanding on the unsupportable debt of other countries. This thing is going to blow up in so many possible ways. The first bomb will likely be the people getting fed up with working for nothing. The wage inequality and blatant theft by the upper class will set off an explosion of internal protest. And these folks protest hard core. That will likely lead to a diversionary explosion that rains down on Japan and or some other neighbors. Foreign war to keep the internal war at bay for a while. Then the economic slow burn will explode. Who is on who's side? Who stops trade, imposes sanctions on whom. Who takes advantage to lessen their debt load?

Will there be any sanity involved? Depends who is really in charge in China and how corrupt and crazy they might be. Across that big populous country there are a lot of areas that seem very isolated from the wider governmental control. When it hits the fan, I suspect a lot of local tyrants will emerge. They may have local backing, or foreign backing of various perverse kinds. Imagine western corporations playing in the game. Supporting this or that regional trouble in hopes of owning a tyrant who controls a large manufacturing area with controlled labor. It could get so wierd.

It will blow. Just how many of the bombs will go off? How big the collateral damage to others?

Thu, 09/27/2012 - 20:41 | 2837267 fourchan
fourchan's picture

the enslaved around the earth will remain working and enslaved, because one guarantees the other.

Fri, 10/26/2012 - 21:58 | 2923279 ronaldawg
ronaldawg's picture

Great - Warlords run the country again - wonder how that will work out.....

Thu, 09/27/2012 - 20:01 | 2837187 mayhem_korner
mayhem_korner's picture



As the saying goes, when the economy goes paws up, the country goes a-warrin'.  Won't be long now, folks.  Time to pop some potassium-iodide flavored corn.

Thu, 09/27/2012 - 20:20 | 2837227 LawsofPhysics
LawsofPhysics's picture

What? China isn't telling the truth about their economic situation? Who would have guessed such behavior from a communist state? Color me "shocked".

Fri, 09/28/2012 - 01:19 | 2837746 Son of Loki
Son of Loki's picture

<< xyz isn't telling the truth about their economic situation? >>


xyz = any country these days

Thu, 09/27/2012 - 20:23 | 2837232 jack stephan
jack stephan's picture

chair with 3 legs.

One of those days zh, time for the magic soda.

Thu, 09/27/2012 - 20:25 | 2837234 Tombstone
Tombstone's picture

It can't China, the world model for central planning?  Since the US is copying the Chinese, does this mean that Washington DC might soon become a derelict ghost town?  Does Benny know about this problem?

Thu, 09/27/2012 - 20:44 | 2837275 Atomizer
Atomizer's picture



What's the matter China? You gave money to the Marxist cell groups embedded in US government positions. What's that? You're not receiving a positive [ROI] Return on Investment. Well, color me shocked fuck sticks. Serves you right to enable squads of passionate Hope & Change goal post changers.


How does it monetarily feel to get ripped off when your flipping the bill for an ideology change? Hahahahaha. We call it, unsustainable entitlement programs in the US, zero return on GDP. 

1983 - Yuri Bezmenov: Sleepers Emerge and Messiah Appears

Thu, 09/27/2012 - 20:46 | 2837280 zippy_uk
zippy_uk's picture

So it's a "Chinese takeaway" Boom,Boom

Thu, 09/27/2012 - 20:48 | 2837285 goodrich4bk
goodrich4bk's picture

The math from China has never added up, and this story is no exception.

The story claims the average working wage is $1,500 yuan a month.  That's $18,000 yuan a year.  But somehow this 61 year old woman "saved" $2,000,000 yuan in the short time that China has had a semi-market economy.

Bullshit.  She or somebody in her family is or was a member of the Communist Party.  They "savings" are merely an accumulation of bribes.  She thought she could parlay this ill-gotten stash into "legitimate" business income, much like the Mafia's children did in Las Vegas in the 1960's.  I have zero empathy for these rentiers who thought they could live off the labor of their tenants.

Thu, 09/27/2012 - 21:09 | 2837319 exartizo
exartizo's picture

Worlds apart geographically and culturally and yet the Greed is still the same. Greed truly transcends all barriers known to man.

Can you say "real estate bubble"?... it's the same in Chinese and English.

Thu, 09/27/2012 - 21:16 | 2837325 Bobportlandor
Bobportlandor's picture

"Bai said many village chiefs he interviewed had no idea how much debt they had."

So Chinese Abacus doesn't have enough beads to get a total sum. Interesting.

Ever think of using a paper ledger? I mean you did invent paper.

Paper was invented by Cai Lun in 105 AD

Thu, 09/27/2012 - 21:17 | 2837334 Atomizer
Atomizer's picture



I have not watched this, just read reviews. Speechless was the consensus. Enjoy



Thu, 09/27/2012 - 22:23 | 2837468 steelrules
steelrules's picture

That film is propaganda, slight of hand, so you take your eye off the true infiltrators .

You can substitute Jew or Zionist for every time they say Muslim or Muslim Brotherhood, and rightly so..

Thu, 09/27/2012 - 23:08 | 2837541 Atomizer
Atomizer's picture

What did your Walmart sad face not understand? Did you see the durables report?


So what happens when the Globalization chain link weakens? Answer, Semi-Periphery States unemployment sky rockets. Your depression mode will set in first. As always, offshore manufacture’s depend on US spending habits. When we close the wallet, you become extinct.


Blows a kiss to turnaround your frown. LOL

Thu, 09/27/2012 - 21:19 | 2837338 billsykes
billsykes's picture

maybe they will pull an american.

(start a war under false pretenses)


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