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China's Credit Nightmare Explained In One Chart

Tyler Durden's picture


Everyone knows that after years of kicking the can and resolutely sticking its head in the sand, China is finally on the verge, if hasn't already crossed it, of a major credit event, confirmed by the first ever corporate bond default which took place a week ago. Few, however, know just why China is in this untenable position. If we had to select one data point with which to explain it all, it would be the following: just in the fourth quarter of 2013, Chinese bank assets rose from CNY147 trillion to CNY151.4 trillion, or, in dollar terms, an increase of almost exactly $1 trillion!

By comparison, US bank assets in the same period rose by just over $200 billion, a number which consists almost entirely of the reserves injected by the Fed.

And if we had to show it in one chart, it would be the following comparison of total Chinese and US bank assets: the two lines shown below are on the same axis, and at the end of 2009, the US had just a fraction more assets than China. Since then the US has added $2.3 trillion in bank assets, exclusively thanks to the Fed's reserve creation. As for China... total bank assets more than doubled from $11.5 trillion to a record $25 trillion! This is a number that is nearly double that of the US, and represents a pace of $3.5 trillion per year - or nearly four concurrent QEs - a rate of "financial asset" addition five times greater than in the US!


Another way of showing just the past three years:


What's worse: China is now hooked to a "flow" pace of $3.5 trillion each and every year, just to generate an annual GDP of about 8% and declining with every passing year. Any reductions in the pace of monetary flow will have magnified implications on China's growth, and from there, social, and globa, stability.

But what does this really mean? Simple: in this epic, unprecedented, feverish pace to "grow" the economy and create hot, if worthless, money out of assets, all assets, even "magic" assets (i.e. thin air), the following took place:

CITIC Trust tried to auction the collateral but failed to do so because the developer has sold the collateral and also mortgaged it to a few other lenders.

Until now nobody cared because defaults were prohibited in China and nobody really cared what was underneath the hood. Now, defaults are allowed and, in fact, are encouraged. Which is why suddenly everyone is starting to cast curious glances into the dark shadows where the engine is supposed to be.

They won't like what they find.

Curious for more: read Chart Of The Day: How China's Stunning $15 Trillion In New Liquidity Blew Bernanke's QE Out Of The Water, and Some Stunning Perspective: China Money Creation Blows US And Japan Out Of The Water


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Fri, 03/14/2014 - 14:23 | 4548916 VD
VD's picture

at least they traded the chimera fiat for gold...

Fri, 03/14/2014 - 14:32 | 4548953 DoChenRollingBearing
DoChenRollingBearing's picture

This will end well.

Got gold?

Fri, 03/14/2014 - 14:36 | 4548975 NoDebt
NoDebt's picture

I was wondering if China's shadown banking industry was going to hit the skids before or after places like JCP and Radio Shack went under.  

But at least Chinese banking outlasted Sbarro and..... Quiznos.  Quiznos just filed for bankruptcy.  How are their shareholders feeling?  Mmm, mmm, toasty!

Fri, 03/14/2014 - 14:51 | 4549042 Levadiakos
Levadiakos's picture

This really Suk Sum Poo

Fri, 03/14/2014 - 14:53 | 4549052 Fukushima Sam
Fukushima Sam's picture

So the US has the cleanest, yet most bloody, shirt?

Fri, 03/14/2014 - 15:06 | 4549118 linniepar
linniepar's picture

I just sold a BigMac and some Freedom fries that I already ate.

Fri, 03/14/2014 - 16:22 | 4549527 Boris Alatovkrap
Boris Alatovkrap's picture

Ancient Chinese Proverb is say,

"Yu flung dung, no chao fo yu!"

Fri, 03/14/2014 - 16:26 | 4549545 1000 splendid suns
1000 splendid suns's picture

The elites know the current paper ponzi monetary system is on it's last wheeze. While each country's liar's paper still maintain some level of confidence, China is using theirs to hoard gold and set up their industrial and metro infrastructure. When the music stops, the Fema camps open, in swoops the IMF and UN and unleash the new shit dollar.

The pentagon can't account for $8.5T, other govt agencies can't account for $5T, yet I must pay my taxes. Sound money and sovereignty has left the USSA, but the MIC is doing fine:



Fri, 03/14/2014 - 21:28 | 4550628 RockyRacoon
RockyRacoon's picture

I just sold a BigMac and some Freedom fries that I already ate.

That should put tomorrow morning's offerings on par with the current typical "financial" asset.

Fri, 03/14/2014 - 15:08 | 4549129 Seer
Seer's picture

Nothing can beat "Best looking horse at the glue factory."  Love that one!

Fri, 03/14/2014 - 14:54 | 4549059 Almost Solvent
Almost Solvent's picture

Quiznos is nasty shit.

Tried it the first time in Vegas, didn't even get through half the sub. Horrible loose shits that evening. Tried it the second time in Miami, got through a few bites before tossing it. Horrible loose shits again that evening.

Fri, 03/14/2014 - 15:08 | 4549126 Herd Redirectio...
Herd Redirection Committee's picture

One of the hidden costs of inflation is that food quality goes down, as restaurants and food producers try to maintain profits without being able to raise prices.

Fri, 03/14/2014 - 15:47 | 4549359 Zadok
Zadok's picture

Quality of everything is WAY DOWN! So sick of outrageous costs for cheap crap that breaks soon, often, and catastrophically! Can't seem to find quality at any price, not like I could afford it anymore anyway!

Fri, 03/14/2014 - 15:09 | 4549133 Seer
Seer's picture

Quiznos, isn't that the "Italian" version of Taco Bell?

Fri, 03/14/2014 - 14:51 | 4549047 pods
pods's picture

And we thought Ben was gonna print till his eyes bled.

Ben was a piker compared to the Chinese.

At least when this is over the Chinese will have their health?


Fri, 03/14/2014 - 15:10 | 4549135 Seer
Seer's picture

LIke I've been saying, the Fed has been doing brilliant work in suckering everyone else into the turd bowl.  The "strategy" being that with enough turds in the bowl we wouldn't fit, and would therefore miss out being flushed...

Fri, 03/14/2014 - 14:53 | 4549056 superflex
superflex's picture

Quiznos could make a filet mignon topped with king crab, asparagus and bernaise sauce taste like a chicken carbonera.

Everything on their menu was shit.

Good Riddance!

Fri, 03/14/2014 - 15:46 | 4549192 Strider52
Strider52's picture

Speaking of things closing, mega-dealer Tulving has been shut down due to non-delivery! 

His website gives no clues ( that he's shuttered.

Update: Tulving files for bankruptcy March 10, so this might be old news...

Fri, 03/14/2014 - 16:56 | 4549693 crusty curmudgeon
crusty curmudgeon's picture

“…if you received metal or cash from The Tulving Company after December 9, 2013, you may be required to return it to the bankruptcy trustee. Returning products in a bankruptcy proceeding is unusual, but may apply here due to the liquid nature and high value of the products.”

Fri, 03/14/2014 - 19:40 | 4550279 Amish Hacker
Amish Hacker's picture

Possession is nine-tenths of the law. Full disclosure, I'm not Perry Mason, but I think Tulving is going to have a hard time proving they still own something you bought, paid for, and took delivery of,  more than three months ago. Especially the "or cash" part.

Fri, 03/14/2014 - 15:36 | 4549271 Renewable Life
Renewable Life's picture

The REAL question of this "chart" is.........Of those Chinese banking assets, how much is from western banks and western corporations doing business in China that because of tax purposes, dont want to withdraw those funds?????

I know the Chinese government knows that answer....does fucking Wall Street???

Fri, 03/14/2014 - 14:57 | 4549068 DCFusor
DCFusor's picture

DCRB, you know I do "got gold".  But I thought it somewhat disingenuous to not mention the population ratios, or scale the charts by something similar - China um, has a few more people in it than the US, right?  This might be doom porn with different rules than actual, informative reporting...I will settle for truth presented in a way that makes more sense, personally.

Fri, 03/14/2014 - 15:15 | 4549142 DoChenRollingBearing
DoChenRollingBearing's picture

Having only partial data when dealing with a complex problem is always, well, a problem.  Yes, China has some four times our population.  But, our GNP per capita is some six times theirs.

I could not even guess how "well" China is served by their banks.  Nor how they work (eg, how many Chinese save or borrow at their banks).

Nor for that matter, gold oz / capita. By the central banks or by the citizens.

So, that takes us up to, what, a five (six?) dimesional matrix with many variables hard to quantify. Maybe the Tylers have freinds over at CERN who could help them with this one...


I just like to remind everyone that having some gold on hand whenever there is more bad (or even questionable) macro-news, it´s a good time remind those who may be new or who have not made the leap into gold ownership to look into it...

Fri, 03/14/2014 - 16:33 | 4549488 headhunt
headhunt's picture

I agree - disclosure, I own gold

Wed, 03/19/2014 - 19:27 | 4569966 Dr. Sandi
Dr. Sandi's picture

The NSA thanks you. They will forward that info to the Department of Taking Your Stuff.

Fri, 03/14/2014 - 15:13 | 4549148 Seer
Seer's picture

And, at least they have something to show for it all: ghost cities.  All folks in the US got was a dumb t-shirt which read: Hope is Wealth!

Fri, 03/14/2014 - 15:27 | 4549215 Yoki
Yoki's picture

China has purchased alot of gold recently, they have already anticipated this crisis and many others. Unlike in America, China has been doing a very good job of monetary policy(in comparison to US). Thus far if you ask anyonw who knows a couple of things, they would tell you that China has done a much better job then America, hands down, Ben shut up, Yellen you're even worse. Take a lesson from China. 

China has brought some 600 million people out of poverty into capital enslavement in the last 20 years, with 500 million or so in the last 15 years

Their monetary policy is simple. Keep the production up. Buy Gold. Screew Americans, sell them cheap crap that will make them sick, (Like the chinese Garlic). Laced Candy, and Dominate the world.

China loves the Russia/US conflict, the more US goes into debt, the better china is off. And China is the real winner on this one. 

Oh yeah, and like the US, China can print to infinity too.


Now serve those drinks to your overloads biatches, you don't want them sober. CTR-P, CTR-P......  Shut up! collect your food stamp. oh look there's Biber!

Fri, 03/14/2014 - 16:33 | 4549352 headhunt
Fri, 03/14/2014 - 18:50 | 4550116 mumbo_jumbo
mumbo_jumbo's picture

"Unlike in America, China has been doing a very good job of monetary policy(in comparison to US)"


LOL...are we reading the same article??  WTF?

Sat, 03/15/2014 - 18:45 | 4553052 epicurious
epicurious's picture

Absolutely right about the danger of eating any food from Asia.  In my travels there I have been astounded at the amount of food grown right in sewage.  This is true all over China.  We grow our own garlic just to avoid this issue and I am fairly wealthy.

Fri, 03/14/2014 - 15:28 | 4549219 mac768
mac768's picture

How will they pay for the Ferrari?

Fri, 03/14/2014 - 15:33 | 4549256 CultiVader
CultiVader's picture

Hey DoChen. Just for my own internal voice, is it 'dough' Chen or 'dew' Chen? My condolences on your most recent boating accident.

Fri, 03/14/2014 - 17:01 | 4549724 DoChenRollingBearing
DoChenRollingBearing's picture

The Pacific has some rough waters just off the coast here in Peru.  Perhaps I should have left my gold at home in some dark place to sit there, but it seemed like it would be safer to bring it down here with me, and taking it out boating.  Well, perhaps it was not so safe...

Do as in "dough".  Do Chen is how a Peruvian-Chinese guy translated "rolling bearing" into Mandarin, that´s how I wound up choosing my moniker here.

Fri, 03/14/2014 - 14:43 | 4549003 Chief KnocAHoma
Chief KnocAHoma's picture

It will start in Asia then cascade like a bitch. Debt and paper assets will be erased overnight causing massive panic. Since 2008 I have thought this was a race to the bottom with the one hitting ground last would be the winner. The FED and money printers may have played this perfectly keeping the US plate levitating long enough for the others to crash.

I think we will find out soon... like before Easter.

Fri, 03/14/2014 - 15:18 | 4549167 Seer
Seer's picture

Before Easter isn't accurate enough for me!

From Wikipedia (

Easter is a moveable feast, meaning it is not fixed in relation to the civil calendar. The First Council of Nicaea (325) established the date of Easter as the first Sunday after the full moon (the Paschal Full Moon) following the March equinox.[7] Ecclesiastically, the equinox is reckoned to be on 21 March (although the astronomical equinox occurs on 20 March in most years), and the "Full Moon" is not necessarily on the astronomically correct date. The date of Easter therefore varies between 22 March and 25 April inclusive. Eastern Christianity bases its calculations on the Julian calendar, whose 21 March corresponds, during the 21st century, to 3 April in the Gregorian calendar, and in which therefore the celebration of Easter varies between 4 April and 8 May.

I need to know for sure, whether I need to file my income taxes or not!

Fri, 03/14/2014 - 14:25 | 4548924 BurningFuld
BurningFuld's picture

I loves a good cataclysm.

Fri, 03/14/2014 - 14:31 | 4548951 McMolotov
McMolotov's picture

Paul Krugman has a raging 2" boner right now.

Fri, 03/14/2014 - 14:37 | 4548978 Winston Churchill
Winston Churchill's picture

0.002" . never trust an economist to measure anything.

Fri, 03/14/2014 - 14:39 | 4548984 Dr. Engali
Dr. Engali's picture

I didn't think enuchs could get a boner. Hmmmm....... Learn something new every day.

Fri, 03/14/2014 - 14:42 | 4548998 Winston Churchill
Winston Churchill's picture

Look up"rig" in a good dictionary Doc.

Fri, 03/14/2014 - 16:48 | 4549649 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

geez, "raging" and "2 inch" don't seem to go together

Fri, 03/14/2014 - 14:27 | 4548934 ultraticum
ultraticum's picture

Na zhende shi hen duo qian!  That's a Sh%$# load of dough.

Fri, 03/14/2014 - 14:29 | 4548941 Seer
Seer's picture

Isn't China communist?  That is, isn't it supposed to be that the State -PBOC- owns most of everything?

The US, on the other hand...

Bottom line: What is the premise?  If it's "growth" then it's can ONLY go this way: perpetual growth on a finite planet is not possible, no matter what ideology or spin is applied to the "process."

Fri, 03/14/2014 - 14:33 | 4548959 Carl Popper
Carl Popper's picture

Sure it can.  All we need is cheap fusion power.  


We could vertically farm with cheap fusion power, mine asteroids, terraform mars and possibly Venus if we build a giant sun shade.  


Energy is the only true limiting factor.  

Fri, 03/14/2014 - 15:30 | 4549233 29.5 hours
29.5 hours's picture



Well, energy -and- common sense.  Common sense is probably the limiting factor...



Fri, 03/14/2014 - 15:41 | 4549314 BKbroiler
BKbroiler's picture

I'm guessing he couldn't find the sarc key

Fri, 03/14/2014 - 15:35 | 4549264 Seer
Seer's picture

Math challenged?

Like any good detective looking to actually solve a "mystery," I've got to ask: where are the bodies?  That is, where are you going to put the inifnite number of people?

The earth's total area is roughly 197 million square miles: this includes polar reqions and ALL bodies of water.  That number isn't "infinite," it's not 300 million square miles, it's a fairly accurate number, but it IS a number, one that's NOT infinity.

The population of Hong Kong is roughly 60,000 people per square mile.  I'm not thinking you're going to be able to shove much more than this into every square mile, so...

60,000 x 197,000,000 gives: 1.182e + 13.  Clearly a HUGE number!  But, infinite is MIUCH bigger.  Go ahead, tell me that we can pack 1 trillion people into 1 square mile because, with no limit, that's an acceptable number accordning to your notion here.  Oh!  And be sure to account for the places in which all that wonderous technology can operate (be sure to account for farm land, fishing etc.).

Fri, 03/14/2014 - 16:34 | 4549578 Totentänzerlied
Totentänzerlied's picture

The entire population of Earth at this moment could live pretty comfortably, in terms of ft2 (or ft3) per person, in a medium-sized country, about the size of Texas. That leaves all other arable land available for agriculture and the non-arable for industry, largely automated.

The issue is energy (including food), and water, specifically the efficiency of the processes by which we use energy to do work, mainly growing food, manufacturing things, and transporting everything. There are thermodynamic limits but we are nowhere near them.

If you qualify "perpetual growth on a finite planet" with "using contemporary industrial techniques and agricultural methods, and assuming contemporary societal and economic configurations" then the statement is as good as tautological. Perpetual growth in hunter-gatherer societies was also clearly impossible, and likewise nowhere near the spatial capacity of Earth's surface. The planet and its resources are indeed finite and largely static too, but employment of those resources, particularly energy resurces, and the efficiency of that, is not static.

The issue is, has always been, energy. If the population was approaching 1 trillion, it would indicate that all previous "hard" limits on population - resources, employment, housing, food and water, sanitation, healthcare - had been thoroughly surpassed, and the only remaining one would indeed be where do we physically put all these bodies.

Fri, 03/14/2014 - 16:59 | 4549712 Seer
Seer's picture

I go from math-challenged to reading-challenged, sigh.

The POINT was about whether or not there could be infinite growth.  PLEASE, read.

Further, without understanding this POINT we will never be able to break out of the game that TPTB have us locked into.  As long as people continue to maintain the belief that there's no limit then eventually it leads to mass starvation/war; and, people will continue to run headlong into a repeat (chanting along with whatever "leaders" or ideology is creating the illusion.

"The issue is, has always been, energy."


That is, energy is only part of the equation.  If I put you out into space, say 1,000 miles from the sun, you'd have AMPLE energy; but, I'm not thinking that you're going to live very long.

Again, either one believes there are limits or one does not.

Fri, 03/14/2014 - 16:52 | 4549661 andrewp111
andrewp111's picture

I believe that a level of about 1016 people, the waste heat alone would be too much for the planet to be liveable. So, there are hard limits that have nothing to do with how many can be packed into a square mile. Long before that point is reached, outer space must be colonized.

Fri, 03/14/2014 - 17:00 | 4549719 Seer
Seer's picture

Thank you for helping make my point! (that there's a limit)

Fri, 03/14/2014 - 15:42 | 4549320 headhunt
headhunt's picture

We are due for a world changing technological breakthrough

Fri, 03/14/2014 - 17:03 | 4549737 Seer
Seer's picture

Due?  As in deserve?

And, would this "breakthrough" be realized by all 7+ billion humans?  Or, would it be realized by only a handful of people (such has always been the case)? and if you weren't a recipient, would you still be excited about this "breakthrough?"

Fri, 03/14/2014 - 17:29 | 4549836 headhunt
headhunt's picture

No one 'deserves' free stuff, 'due' as in there are a lot of smart people on this world working on crazy shit that will produce some breakthrough, intentional or unintentional, which will change the world.

As a consequence the likes of Putin and the Saudis will wither away over time. If the 'wrong' person invents 'it', wars will be fought over whatever 'it' may be.

In the meantime hold on - it's going to be fun.



Fri, 03/14/2014 - 17:32 | 4549797 caustixoid
caustixoid's picture

We are due for a world changing technological breakthrough

Reminds me of the Cheers episode where Sam goes broke and has to sell his precious sports car.  As he is required to turn over the keys he pulls away and says in a panicky voice.  "Wait!  I just need to invent a product America needs."

Time's up

Fri, 03/14/2014 - 15:24 | 4549196 myptofvu
myptofvu's picture

Ideologically its communistic, Economically its capitalistic.

Fri, 03/14/2014 - 15:36 | 4549277 Seer
Seer's picture

Bottom line: it's operating on the premise of perpetual growth on a finite planet, which = FAIL (sure, there will be good times and all, but the party ALWAYS ends, no matter the ideology)

Fri, 03/14/2014 - 15:40 | 4549308 headhunt
headhunt's picture

If all your mentors are communist, so are you

Fri, 03/14/2014 - 17:08 | 4549759 Seer
Seer's picture

Hm... I've had atheist friends who grew up in Christian families: one even started working to become a pastor.

Once again, broad brushes never paint anything meaningful...

Fri, 03/14/2014 - 14:29 | 4548943 LawsofPhysics
LawsofPhysics's picture

That's a lot of yuan (pronounced "yawn").

Fri, 03/14/2014 - 14:30 | 4548944 Carl Popper
Carl Popper's picture

There is no way that degree of credit expansion was allocated efficiently.   There are trillions more in bonds that won't ever be redeemed. 


This should be interesting to watch. 


They will try a combination of monetization and default.  It is hard to walk that tightrope without falling off one side or another. 

Fri, 03/14/2014 - 15:43 | 4549330 negative rates
negative rates's picture

You ain't been playin marbles on your time off now have yee?

Fri, 03/14/2014 - 16:12 | 4549482 debtor of last ...
debtor of last resort's picture

CP, markets will price in 80/20 default monetize ratio. Soon to be reversed in 95/5 through ctrl-p by the pboc? Because with 80/20 everything will collapse.

Fri, 03/14/2014 - 14:30 | 4548946 q99x2
q99x2's picture

As long as they are consistent and devoted which it appears as if they are things should work out well based on that chart. By printing fiat and purchasing up the rest of the world with that fiat a group of people or a nation could take over the ownership of the world. The more you print the more you own. It works if you work it.

Fri, 03/14/2014 - 14:31 | 4548947 Yen Cross
Yen Cross's picture

      Infographic time. What $1 trillion looks like.  Now multiply that by 25 and the shear insanity of central banksters comes to light...

Fri, 03/14/2014 - 14:33 | 4548955 DoChenRollingBearing
DoChenRollingBearing's picture

+ $25 trillion.

For what that´s worth!

Fri, 03/14/2014 - 14:33 | 4548957 Dr. Engali
Dr. Engali's picture

Thank goodness we still have Africa to exploit. The world needs a few moar empty cities. They make great battle grounds for the zombie apocalypse. 

Fri, 03/14/2014 - 14:35 | 4548961 yogibear
yogibear's picture

A race to the cliff.

Does China and Russia destroy the US economic system or the US destroy both China and Russia's economies?

Both Japan and the US are also the credit junkies livivg on the street in poor health.

Fri, 03/14/2014 - 15:38 | 4549292 headhunt
headhunt's picture

If US and Japan are credit junkies, China and Russia are crack ho's

Fri, 03/14/2014 - 16:00 | 4549428 Seer
Seer's picture

It's a global system, it all goes at the same time, roughly.

The only question is what each country's structure will look like/operate as when it all goes down.  Russia, US and Canada, the ones that'll be the places to be: ample resources, though consumption will be restrained (better a little than none).  And, given the large land masses of each, that it'll also come down to regional capabilities.  While the real estate sector should be wiped from our memories there's one valuable thing from it that we should  ever lose awareness of: Location, Location, Location...

Fri, 03/14/2014 - 14:36 | 4548970 B.J. Worthy
B.J. Worthy's picture

Is anyone still using the words "soft landing?"

Fri, 03/14/2014 - 14:41 | 4548990 Dr. Engali
Dr. Engali's picture

Is this the flight 370 thread?

Fri, 03/14/2014 - 16:03 | 4549438 Seer
Seer's picture

It's now come down to just hoping that there'll be a "Landing."

Fri, 03/14/2014 - 14:42 | 4548997 Hohum
Hohum's picture

Well, China has about 4x the number of people as the USA, so not much of a difference per capita.  Party on!

Fri, 03/14/2014 - 14:53 | 4549051 Panafrican Funk...
Panafrican Funktron Robot's picture

This is a good point.  Consider also that currency printed vs. GDP increase is virtually identical to the US.  They're just keeping pace with our relative rate of printing/real valuation.  People are also forgetting that defaults are occasionally allowed here to, when they are expedient for the strategy at hand by the controllers.

Fri, 03/14/2014 - 14:43 | 4549000 skins1
skins1's picture

Sum Ting Wong?

Fri, 03/14/2014 - 14:45 | 4549013 docmac324
docmac324's picture

Gonna need a war to fix that.


Oh, wait....

Fri, 03/14/2014 - 14:45 | 4549014 rosiescenario
rosiescenario's picture

1 trillion in the last 1/4 of 2013......that is a hard number to achieve it collateral must be re-cycled several times to new lenders.....obviously.

Fri, 03/14/2014 - 14:49 | 4549021 Smegley Wanxalot
Smegley Wanxalot's picture

Once the shit hits the fan in China, they move on the Senkakus to drum up the nationalist fervor and shut down the complaints of the population, while Putin deflects the braindead DC fucktards in eastern europe. 

So China gets east Asia, Putin gets east Europe, and Obama gets put in his rightful fucking diminished place (still more than that cunt deserves).

Fri, 03/14/2014 - 15:48 | 4549364 Chewybunny
Chewybunny's picture

The assumption would be that China would win the war?
Even if the US or any other nation will not intervene between the dispute between Japan and China, and they DO go to war...I believe Japan would win. China's greatest military asset (sheer manpower) is meaningless when it comes to Japan. The islands have never been successfully invaded, and every attempt has been met with death. Arguably one of the reasons we nuked them in the first place as a mainland invasion of Japan would have been blood-bath. The Chinese know it. They learned their lessons from their own actions, the Mongols' actions, and the US actions when it comes to dealing with a culture that is predominately militant at it's core (Japan).

Fri, 03/14/2014 - 16:08 | 4549461 Seer
Seer's picture

Japan, are you serious?

Ever consider Japan's invasion of China as a nice little rallying point?

Japan is stuck on its island.  Demographics already indicate its future.

The US won't have the will to engage in any Japan/China war: not unless this is the last war of "civilized" man- next war fought with sticks and stones.  And, really, the founders warned of mucking about in the affairs of others.

Fri, 03/14/2014 - 17:30 | 4549843 caustixoid
caustixoid's picture

Japan has the best-equipped military in Asia, and certainly the better navy.  China's trump cards are its huge army and nukes.   Any full-scale war would be unwinnable in the sense of total victory and occupation and unthinkable in terms of certainly setting off WWIII as Russia and the US protect their interests. 

However naval skirmishes?  limited battles?  Possible.  The wheels are coming off both their economies and the natives are going to get restless.   Could be a nice distraction.  As we saw when the Iraq War started, domestic dissent during war is mostly self-stifled, or otherwise crushed to popular opinion.

Hell if the leadership of the two countries were really smart they'd choreograph a little limited war - go back to 17th C. European rules of battle - set the time, have a nice breakfast, blow the horn to warn you're coming...  already have the peace terms signed giving China the islands and Japan drilling rights.  Win-win.


Fri, 03/14/2014 - 14:50 | 4549039 JimmyRainbow
JimmyRainbow's picture

plz, i have only a few braincells,

why the hell is gold so cheap?

everyone wants it, it is sold in mega large amounts and the price declines

i mean what the heck could be the big plan behind this?

other metals price manipulated with warehouses

only gold going down all the time

something very very big has to be going on out of sight

Fri, 03/14/2014 - 14:57 | 4549070 Winston Churchill
Winston Churchill's picture

Bet you thought it was JPM keeping the paper gold price down ?

Surprise, its probably the PBOC so they can buy phyz cheap.

That games nearly over.

Fri, 03/14/2014 - 16:11 | 4549473 Seer
Seer's picture

"why the hell is gold so cheap?"

Because you've got a lot of currency? (remember: the overwhelming majority of humans live off of $3/day or less)

Gold is actually way "up" over what it was a few months back.

But, being a bit more academic, the USD is outlasting others' currencies (which are being driven into the ground in order to try and maintain their export market share).

Fri, 03/14/2014 - 14:56 | 4549063 skwid vacuous
skwid vacuous's picture

Sum Ting Wong

Fri, 03/14/2014 - 14:58 | 4549075 eaglerock
eaglerock's picture

So, if the shit hits the fan in China will they offload their $1.2 trillion in US Treasury Bonds?  How will that impact us?

Fri, 03/14/2014 - 15:01 | 4549090 The Most Intere...
The Most Interesting Frog in the World's picture

In Chinese accent: Print more dollar dollar!

Fri, 03/14/2014 - 15:08 | 4549127 Winston Churchill
Winston Churchill's picture

By itself not much as the FedRes will print them up dollars.

If they sell those dollars, it will cause a stampede of $16 trillion dollars held overseas

to rush back to the US, causing hyperinflation within months.The greenback would be totally

worthless.China selling those UST's is the equivalent of shouting fire in a crowded theatre.

Fri, 03/14/2014 - 16:13 | 4549484 Seer
Seer's picture

Then we're completely on our own to finance our debts.  Certain end to any possibility for "growth."

Fri, 03/14/2014 - 15:04 | 4549106 B2u
B2u's picture

ho lee fuk

Fri, 03/14/2014 - 15:06 | 4549119 B2u
B2u's picture

I asked a Chinese girl for her number.

She replied, "Sex! Sex! Sex! Free sex tonight!"

I said, "Wow!"

Then her friend said, "She means 6663629."

Fri, 03/14/2014 - 16:13 | 4549491 Seer
Seer's picture

And, well, did it end up being free?

Fri, 03/14/2014 - 15:18 | 4549170 Hayabusa
Hayabusa's picture

At one point I considered learning the Chinese language - in preparation for their world economic takeover.  Not so much anymore... sometimes procrastination can be a good thing.

Fri, 03/14/2014 - 16:15 | 4549499 Seer
Seer's picture

My wife complains that I don't speak Tagalog.  I told her that since SHE can speak English then it's more important that I learn Diesel (learn about maintaining our truck and tractor).

I Walk the Talk, just don't kinow how to Talk it :-)

Fri, 03/14/2014 - 15:22 | 4549187 john milton
john milton's picture

Hey tyler or something, stop publishing these things and telling the truth, sheeple might belive it..

Fri, 03/14/2014 - 15:44 | 4549337 Chewybunny
Chewybunny's picture

I'd like to know if there is anyone here who knows who pays for post-war damage?

China and Japan are at each other's throats, yet neither can afford the demographic hit a war will cause.

What DOES china stand to lose to a war? a bunch of empty cities suddenly getting bombed. So I am wondering, if China and Japan go to war it would probably mostly bombing runs and very little direct soldier on soldier combat. If Japan bombs a bunch of cities that we all know are empty, and there's nothing left of those, what happens to those unused assets? Are they still on China's books? 


Fri, 03/14/2014 - 16:18 | 4549505 Seer
Seer's picture

"If Japan bombs a bunch of cities that we all know are empty, and there's nothing left of those, what happens to those unused assets? Are they still on China's books? "

If they've actually learned from the pros in the US they'll locate their books in those cities.

Fri, 03/14/2014 - 15:59 | 4549376 Chuck Knoblauch
Chuck Knoblauch's picture

Quiznos follows Sbarro into Chapter 11 Bankruptcy.

Brand name franchises are going out of business or downsizing in the US.

Keep pointing the finger at China and ignore your own problems. Laughing at the other guy as your boat sinks too.

Maybe you'll start taking it seriously when Papa Johns files under Ch. 11?

Fri, 03/14/2014 - 16:12 | 4549483 skwid vacuous
skwid vacuous's picture

Papa John's just doubled, shitty tasting pizza and all... QE special i guess

Fri, 03/14/2014 - 17:45 | 4549910 Hayabusa
Hayabusa's picture

I'm fine with Papa John's going under... skwid is right, their pizza tastes like what I suspect shit tates like.  Who the hell is eating that crap anyway?!!?  Doubled, r u shitting me?

Fri, 03/14/2014 - 15:52 | 4549379 debtor of last ...
debtor of last resort's picture

In the not too distant future, all there's left is the central banks and a few subsidiaries, all trying to shit in the SDR basket.

Fri, 03/14/2014 - 16:14 | 4549492 joego1
joego1's picture

I think about the time that Nixon went to China and made a deal the Chinese leadership thought "ok we play the Yankee game but in the long run we can change the rules back when we please". So over the years they have accumulated a huge amount of knowledge and technology along with investments from many western companies which arguably balance out the loss that they might take on western paper. If the game goes to reset whats to stop China from making everything that's private now public again and flipping the west the big red finger?

Fri, 03/14/2014 - 16:22 | 4549526 Seer
Seer's picture

The US has more resources and less people than does China.

The US got China addicted to the automobile culture (and it has little in the way of liquid fuels).  And, folks in the US have been on the slow conditioning for unwind whereas the people in China are still stoked with "growth in to infinity."

Fri, 03/14/2014 - 16:56 | 4549692 pragmatic hobo
pragmatic hobo's picture

chinese government should be getting a clue ... capitalism was a trojan horse ...

Fri, 03/14/2014 - 17:10 | 4549766 Seer
Seer's picture


Growth is the real Trojan Horse.

Fri, 03/14/2014 - 17:17 | 4549791 forwardho
forwardho's picture

Perpetual motion is impossible as long as there is gravity.

I am however selling shares in the Philosophers stone.

Fri, 03/14/2014 - 18:11 | 4549985 AgentScruffy
AgentScruffy's picture

So, maybe I should hold off on "diversifying" into yuan, as Jim Rogers advocates?

Fri, 03/14/2014 - 19:26 | 4550004 honestann
honestann's picture

This is epic, if not somehow exaggerated.


For any honest sentient being, this and similar charts is absolute proof that fiat money and fractional reserve banking are pure, undiluted, unadulterated, predatory destruction.

When some individuals (predators) can literally create unlimited sums of fiat, fake, fraud, fiction, fantasy, fractional-reserve debt that is [mandated as] accepted for real goods, the only possible results are:

#1:  the predators and liars become rich and powerful.

#2:  the producers and honest become poorer and abused.

#3:  the total wealth of nations and the entire world decline.

#4:  the aggregate productive efficiency of man declines.

This is why the "end" is coming.  Most humans can't figure out what the problem is in a clear, concise, coherent, sensible manner, but the evidence is too overwhelming not to recognize.

Because virtually zero humans can identify the fundamental nature of the situation, overwhelming widespread disaster is assured.  And the predators doing business as "government" and "corporations" and "authorities" and NGOs who caused the coming catastrophe have the high-tech means (weapons and media) to assure they live like kings while everyone else lives like animals.

Perhaps the saddest fact is, because even the smartest and most productive humans are thoroughly brainwashed at this point in history, they don't even know what to complain about.  Worse, they've been thoroughly trained to be incapable of honest thought in the realm of human action (and especially interaction), so they will support whatever plans and actions the predators claim are necessary.

Which is why, humans are finished.

A message to anyone who wants to survive the coming disaster, and not suffer much.  Sell everything you own, move to the [extreme] boonies in some non-mainstream part of the world [with reasonably benign weather], and learn to live as cheaply as possible.  Otherwise, just kiss your ass goodbye.

Fri, 03/14/2014 - 20:59 | 4550541 twotraps
twotraps's picture

Well said. People don't get it. That may be the sinister genius of the whole charade. Not sure if I'm ready to kiss my own ass goodbye....I do own everything and think about trading in paper assets for useful durable goods and land. However...I would offer that the only thing we know for sure is that if its gets dicey....they will change the rules as we saw in '08. So, what plans can we reasonably make?

Your description of the situation is outstanding.

Fri, 03/14/2014 - 21:43 | 4550667 22winmag
22winmag's picture

Meh, when I hear everyday folks in three piece suits and construction overalls congregating at the pizza shop, gas station, and Walmart ammo counter, and griping about the FED, the CFR, the Nazi-Bush-JFK connection, and the NWO, I know who will be left standing when the dust clears... pissed off Americans.


That's right. Who'd have thunk it?


The American Spring... a genuine spring that's coming soon to a planet near you, backed by the largest army on earth sporting hundreds of millions of exotic firearms, It will be a firestorm and a redemption the likes of which the world has never seen.

Sat, 03/15/2014 - 10:14 | 4551633 Liberty2012
Liberty2012's picture


Hopefully, the last sentence turns out to be an exaggeration.

That is the question though. How will it all play out?

I'm glad you're seeing the first part, many different people talking to each other about real things. That's what's been missing for a long time.

We the People create the world we live in with every choice we make.

Truth => Individual => Responsibility => Freedom

The price of anything is the amount of life you exchange for it. - Henry David Thoreau

Life => Time Talents Treasure x Choices Shared

Sat, 03/15/2014 - 22:32 | 4553738 honestann
honestann's picture

The sad fact is, the problems cannot be fixed until at least a few percent of human beings become at least MINIMALLY SANE.  And there is zero sign of that today.  Let me mention just one example of what I mean.

Almost all humans believe "government" exists.  The problem with this is, everyone who believes this is flat out insane... in the most fundamental possible way (the inabiliity to distinguish what exists from what does not exist, what is real from what is fiction, what is from what is not).

One can examine this question in either of [at least] two ways:

When a couple dozen humans sit down at a table, spread ink on paper, then sign their names at the bottom (spreading more ink on paper), does anything "pop into existence"?  No.  They simply smeared ink on paper.  That is all that happened... (unless you count some minor reconfiguration of mental-units in their own heads).  Just because you call the yokels who smeared ink on paper 240 years ago your "founding fathers" does NOT mean that people spreading ink on paper creates anything.  It does not.  Otherwise there would be endless other "nations" and "governments" and other nonsense created when endless other groups of a dozen or three humans smear ink on other pieces of paper.

This is obvious.  No matter HOW MANY TIMES the nonsense of "creating government" has been beaten into your head by parents and history teachers and television programs and other morons... the FACT OF REALITY is, nothing is or was created when a dozen or three humans spread ink on paper.  To claim something real was created is to admit insanity of the most fundamental kind.

Or, think about this topic from the other angle.  Is there ANY legitimate basis whatsoever to claim that a dozen or three humans can smear ink on paper... and somehow thereby obligate millions or billions of other human beings then --- and now 240 years later?

I mean, you have to have a case of insanity and delusions of grandeur on an astronomical scale to even pretend that a couple dozen individuals can obligate every other human within hundreds of thousands of miles to unlimited abuse and theft and manipulation... much less go on to claim their children and grandchildren and endless generations to come are also obligated by those jerks smearing ink on paper 240 years ago.

I mean... if you actually believe either of these notions (which at least 99.99999% of humans do)... think about what you are claiming!  Think about how obviously insane these notions are.

Even if you can twist your brain sufficiently to seriously entertain such absurd notions at all, you must face the following fact (and many more).  If those dozen or three individuals can create such an entity ("nation" or "government")... then every other dozen or three individuals can also smear ink on paper and create equally legitimate ones --- all of which are sure to contradict each other!

The FACT is, humans at this point in history are so utterly and thoroughly insane that their fate seems absolutely certain.  As I said above, the vast majority of even the most intelligent, brilliant and even benevolent humans today simply accept endless fictions like these as GIVEN and SELF-EVIDENT.

And yet... just a little thought exposes these notions as so completely absurd that only insane beings could possibly believe.  This is the state of reality... on earth... today.

So, to carry the conversation you were having to the next step.

So what if a bunch of gun-toting people get so pissed off that they decide to die fighting the predators they and their parents and their neighbors handed trillions of dollars to over the past decades to establish the predators in such dominant position?

Hell, what happens even if somehow they manage to WIN ???

Answer:  They will continue to accept endless fictions as fact.  They will continue to accept the notion that a few people, or the vote of a majority, or the vote of their so-called representatives...


As opposed to YOU running your life, and me running mine, and everyone else running their own lives... without ANYONE ruling over them.

Until humans wake up and recognize that so-called "nations" and "governments" and "authorities" ARE FICTIONS... and DO NOT EXIST... the cycle will never end.

ANY widely accepted fiction WILL ALWAYS BE taken over by predators, and turned into a means of predator domination over producers.




The only hope humans have is to GET REAL.

But that means, stop treating fictions as if they are real.  Stop treating non-existents as if they exist.  Stop treating what is not as if it is.

But humans are so utterly and thoroughly insane, confused and brainwashed at this point in history, I cannot even imagine any way for humans to become sane and "get real" that isn't just fantastical fantasy!

Can you?

Yes, I'm fairly smart.  But not as smart as a million or more other individuals on this planet.  So I don't recognize these issues because I'm smart.  That's not what matters.  What matters is the key portion of my username on this site... honest.  What I am that vanishingly few humans are is: honest with myself.  I am ONLY interested in understanding what is, with absolute zero desire for self-deception, no matter how much I might like any fantasy was real.  Because wishing doesn't make fiction or fantasy real.  And I only live in the real world, and only can live in the real world, because the real world is the one and only world.

And the challenge, should the better [productive, benevolent, liberty-loving] humans somehow prevail against all odds?

Become sane.

Abandon all fictions.

The problem is.  I can't see that happening.  I can't imagine that even the very best people on this planet will become sane.  Yes, it is not impossible - humans are certainly capable of being sane.  They just don't know how.  It has been bred and brainwashed out of them.  And humans are habit machines.  Hence the problem.  See Pavlov and his dogs for more understanding.

Sat, 03/15/2014 - 22:48 | 4553775 FredFlintstone
FredFlintstone's picture

Yes, you are smart. Smarter than me. Thank you for that insight. I hope I remember that in the morning. "Ink smeared on paper"...that will help. My daughter is a 2nd year law student. I can have fun with this (piss her off a little).

Sat, 03/15/2014 - 23:39 | 4553888 honestann
honestann's picture

Glad you like it.  It is surreal to understand the state mankind got itself into.  BTW, if your daughter gives you a hard time, ask her why the most fundamental long standing law (as in centuries) calls all organizations (including government) "fictitious entities".  That might slow her assault down a bit.  Either that or she'll call a SWAT team to come arrest you.

The truth is, humans weren't AS insane hundreds of years ago.  And they were even less insane thousands of years ago.  At least in the sense of being more firmly attached to reality (even though they didn't understand reality nearly as well as is possible today).  But their long hard hours of physical work with reality gave them a better intuitive sense of reality, even as they accepted their own nonsense fictions.

But since wide-scale, highly-organized, highly-promoted brainwashing was implemented (public schools, mainstream media, etc), humans have been brainwashed and programmed to be utterly incapable of distinguishing reality from fiction.

Sat, 03/15/2014 - 10:13 | 4551645 Liberty2012
Liberty2012's picture


"Perhaps the saddest fact is, because even the smartest and most productive humans are thoroughly brainwashed at this point in history, they don't even know what to complain about."

But you're not :)

Thank you for the great description of the situation.

Sat, 03/15/2014 - 00:01 | 4551108 AdvancingTime
AdvancingTime's picture

The more and more I study derivatives it now appears the main goal of QE may have been to hold up the underlying value of assets that feed into and support the massive derivative market more than help the economy. QE has up to now stopped an implosion of derivatives and the resulting contagion and shock that would have spread throughout the financial system.

Paul Wilmott from Oxford University estimates the derivatives market at $1.2 quadrillion, to put that in perspective it is about 20 times the size of the world economy. The point of the article below is to call attention to the insanity of derivatives as an instrument or tool to add stability to our financial system. By stacking risk upon risk and transferring it off to another party who may not be able to preform you do not increase stability.

Sat, 03/15/2014 - 10:08 | 4551642 Liberty2012
Liberty2012's picture

In other words, it's a way to create chaos.

Few look at risk plainly anymore. Most are too busy chasing all the current "rules" looking for how to play the game of the moment, how to get a temporary advantage over the next guy.

In the end, people who work together will win.

Do NOT follow this link or you will be banned from the site!