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Spot The Real Liquidity Bubble
Overnight the PBOC released the latest Chinese bank loan and liquidity data for the month of January. Those who have been following our recent series on Chinese liquidity measures will know that when it comes to the real marginal source of global liquidity, it is China that is the true unprecedented juggernaut, putting both the Fed and the BOJ's "puny" QE programs to shame (see "Chart Of The Day: How China's Stunning $15 Trillion In New Liquidity Blew Bernanke's QE Out Of The Water", "Some Stunning Perspective: China Money Creation Blows US And Japan Out Of The Water"). And January's data was simply the final exclamation mark in a decade-long series in which China's prosperity has been simply the result of an exponentially increasing amount of loan and liquidity creation by the Chinese semi-national and government backstopped financial system.
Here are the numbers:
Total Chinese loan creation in January was CNY 1.32 trillion, or $218 billion. While January traditionally sees a pick up in loan creation (and demand), the 174% increase in bank loans from December was an unprecedented number, was above the CNY 1.1 trillion, and CNY 250 billion more than a year ago. More notably, this was the largest monthly bank loan injection since January 2010. The last time China scrambled to inject massive amounts of bank loans was in late 2008 and early 2009 when the world was ending, and it was China's money that stabilized the global financial system far more so than the Fed's whose QE 1 did not begin in earnest until March 2009.
The far broader monetary aggregate, Total Social Financing, which is the most encompassing calculation of credit and liquidity created in China in any one month, rose to CNY 2.58 trillion. This was more than double the December's $1.23 trillion, and beat last January's CNY 2.545 trillion. In fact, this month's broad liquidity creation was the largest monthly amount in China's history!
Here is what Reuters had to say about the overnight data:
January’s lending surge aside, China’s central bank has consistently signaled in recent months that it wants to temper credit growth to slow a rapid rise in debt levels across the economy.
It has focused in particular on keeping short-term interest rates elevated to force banks to stop lending to speculators or high-risk borrowers.
Analysts polled by Reuters in January said they expect China’s economy to grow 7.4 per cent this year, an enviable performance for a major economy, but still the worst for China in 14 years. The economy grew 7.7 per cent last year.
Here's the problem: one can't put the January lending surge aside, as it came at a time when for the second time in six months the PBOC tried to taper, only to be forced to not only bail out its money markets, but is on the verge of a bankruptcy tsunami involving its shadow banking products, the first of which it also bailed out despite repeated warnings this time it means business and would let it die. In this context, the January number is precisely what it appears: the bank's logical response to a liquidity crunch as the Chinese regime finds itself in the same spot that the Fed has been in for the past 5 years - it must keep the monetary spice flowing, or else the party is over. And just like the Fed, and now the BOJ, so too does China not want to deal with the fall out if all it takes to created yet another quarter of increasingly subpar economic growth is another record of funny money conceived out of thin air.
The only problem is that it is becoming increasingly difficult to hide all the pieces of funny money, most of which result in bad and otherwise impaired loans, under the rug. And just to show the problem in its context, here is how China's banks created some 50% more in bank loans in January than the QE credit money created by both the Fed and the BOJ combined.
And finally, here is China's nearly half a trillion in total liquidity added to the system in just one month (some deleveraging, right?) looks compared to the Fed and the BOJ's much maligned and unprecedented uncovnentional monetary policy.
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Here are some fun facts regarding China's [futuristic] pragmatic ideology since Deng Xiaoping ( http://en.wikipedia.org/wiki/Deng_Xiaoping ) 1978 growth strategy became a reality.
China has had an ever stronger relationship with nuclear Pakistan since 1973. They continue too this, day building up their (Pak's) infrastructure while building bilateral economic policy helping both countries economy, especially where the province of Xinjiang is concerned. And lets not forget the taliban centric no-man's land called Balochistan where the one-eye Mullah Omar can bring peace or war to america's achilles`heel... Afghanistan (China does all the industrial mining in Afghanistan besides other worthwhile enterprises)!
Now, let's move to China's relations regarding the pissed off country of Saudi Arabia (SA). Once a USSA ally, now becoming an adversary? They are in negotiation to build as many as 20 nuclear power plants.
Turkey is moving ever so closely to China regarding business and military hardware, and with their geography there will be a trilateral-axis forming rather quickly incorporating the energy rich Russians (perhaps germany will join them?) to control all of Eurasia leaving Japan's woes to the USSA failed Asian-Pivot!
Last, but not least... China is big time in South America! Once the Panama canal is finnished and their heavily financed canal that Nicaraqua just signed onto in Hong Kong gets moving along they will have no need of Panama or the USSA! The Iranian's are signing oil contracts that go beyon sanctions for years as is the entire ME (GCC).
There you have just a few fun facts besides the fact that since the USSA has been fighting all the world's war's... it has been China (and Russia) doing all the business!
get back,...
thankyou Tyler
While the west has been propping up their top 1% with their fiat manipulations, China has been buying gold.
No matter what anyone says, just one question.
Who has made the smarter purchase?
Wait, wait, I know, pick me, I know.
I'm probably being a little biased, but I think China made the correct choice. Also, the elite 1% want the RMB to be the new reserve currency. Like I said earlier, they sold their mother (USA) into prostitution years ago for a bigger portfolio. I wonder if the Chinese will let them live in the new China. Maurice Strong has it nice over in China, so I'm sure you'll be treated well too. I wonder how much Maurice pays China for protection and security services? lol.
Kanye West feat Jamie Foxx- Gold Digger UNCENSORED
http://www.youtube.com/watch?v=G69jMPMOxWE
Kanye West - Gold Digger ft. Jamie Foxx
http://www.youtube.com/watch?v=6vwNcNOTVzY
Here is a scenario:
China buys as much gold and silver and copper as possible while they keep it together by doing whatever it takes with subsidies and QE. This is helped by the West's idiotic policy of suppressing the price of the metals. When china feels that they have amassed as much as possible, they link to a metal standard and simultaneously sell their hoard of foreign reserves. This will make their currency strong and everyone elses very weak. Now the 'exorbitant privilege' is theirs.
This seems to me to be an excellent strategy for the inscrutable Chinese. It costs them nothing since it is simply 'printed' money ... I wish I could print money that someone would exchange for gold, silver, copper, rare earths, etc. We must be the most stupid nation to ever exist to let number two out 'print' number one. No wonder there are so many Chinese millionaires scrambling for the exits ... they know we can't be that stupid much longer.
Since Wilson brought America into [1917] WW1-- a promised he made to the american people but a measly nine months prior was to keep the USSA out so as to get reelected ( http://voices.yahoo.com/election-1916-woodrow-wilsons-promise-stay-out-29292.html ) the USSA goes to war and wins big in little more than a years time of entry! Becoming the undisputed creditor [heavy weight champion of the NWO?] nation of the world! Remember that in 1913 he signed the FRBs Act.
So now in 1919 america is king $dollar with all of Europe highly indebted to U$S? But, what to do about that pesky thing called a GoldStandard! With gold being a problem for raising the debt ceiling. As we all know,... physical gold has always been the benchmark for determining inflation (tighten) and deflation (loosen) without even breaking a sweat!
Sadly, it had to go once the FRBs gained a footing years later when FDR does a EO#6102 ( http://en.wikipedia.org/wiki/Executive_Order_6102 ) in 1933... just fifteen years after (1919?) America becomes 'King Hegemony'! Coincidence[???],... and Europe is incensed six years later in 1939 by a nutjob, called Adolf (the KKK all in one which hated everyone and anything that wasn't to their liking)!
Got too be able to raise the debt ceiling without no fucking gold parameter/ benchmark telling us it was inflationary... right? And, our bringing Japan into WarII by cutting out their soul!?! (unhistory students listen up?... no steel, no oil, no exports from USSA= backlash)!
WWII begins and the USSA wins, [1944 was the year],period! Capitalizing on... 'don't-waste-a-great-crisis'[esp. world war] handing out tons of money, I mean tons of greenbacks to Europe and beyond ones yonder!
So,as you've probably figured out-- Europe gets it's financiallegs back, but... the USSA can't stop it's bad habit of ignoring that foolish relic called Gold as a parameter/benchmark for inflation/deflation an tricky China's (Communist- Kissinger &Nixon?) Nixon ends the Gold Standard via the 1971 Bretton Wood's evisceration (http://en.wikipedia.org/wiki/Nixon_Shock )!
So that's it! Can't have a gold standard with a fiat system that can tell one country when it's OK to fight a war on principle, rather than on fiduciary responsibility.
jmo
Here's what you've been looking for explaining the Chinese shadow banking sector
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10639036...
The Telegraph is a MI6 rag of disinformation.
So what's the scoop on Mr. Janet Yellen?
but this is ok I guess:
quoted article:
Yellen Spouse Akerlof Resigns From UBS-Funded Center in Zurich
It seems to me that if China is truly printing to cover its obligations, operations, and Gold aquisitions, why then isn't the US also trying to buy as much Gold with it's fiat as it can, before the USD is worthless?
It seems to me that if China is truly printing to cover its obligations, operations, and Gold aquisitions, why then isn't the US also trying to buy as much Gold with it's fiat as it can, before the USD is worthless?
The US thinks it can back a new reserve currency with guns and threats. And why not? This is the current state of affairs, isn't it? The US has flexed itself into a corner. The US has turned itself into an annoying barking dog that doesn't have the guts to fight a real enemy like China.
The convergence of massive Chinese gold buying and massive currency printing cannot be coincidental. If I was planning on introducing an entirely new currency in the near future ( during a global currency reset )--during which I would be arbitrarily designating the exchange rate between old and new denominations-- I would be pushing the pedal to the metal to game the old system as much as possible myself.
The reason is simple:
Chinese coal industry is going broke & need loan! They got finance from shadow banking industry for a long time but have a hard time right now.
Zero hedge had a great article about the coal industry on 2/11/2014.....