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Meet The Bureaucrat Who Had The Courage To Tell The Truth (& Will Be Jobless Tomorrow)
Submitted by Simon Black via Sovereign Man blog,
It’s not very often that you hear a senior government official refer to their economic situation using the word ‘crisis’.
Yet with uncharacteristic bluntness of any government official anywhere, at least one senior Chinese government official is sounding the alarm bells.
And he would know.
Guan Tao oversees the foreign exchange of China’s $4 trillion stockpile of reserves, so he has an incredibly unique view of capital flows and currency movements in and out of the country.
Currency movements and capital flows are extremely interesting indicators.
They don’t necessarily tell you that there’s a problem. They tell you that people have figured out there’s a problem.
Look at Greece, for example.
The government is bankrupt, another default is looming, and the country is literally about to run out of money. It’s pretty obvious that there’s been a problem for a very long time.
But the central bank data in Greece now shows that roughly 8% of all customer deposits have vanished from the Greek banking system so far this year.
That’s an astonishing figure.
Again, a currency movement like this doesn’t tell you that there’s a problem. All the other data can tell us that.
The currency movements out of the banking system tell us that the people of Greece have figured it out… that they’ve lost confidence in the system.
This is extremely important… because the entire global financial system is only held together by a very thin layer of confidence.
Nearly every western government is bankrupt. Central banks are borderline insolvent. Banking systems are extremely illiquid.
Everything about this system is fundamentally weak. And the only reason that people aren’t panicking is because no one else is panicking.
Like a very thin piece of glass, the tiniest chip can turn into a crack… and ultimately shatter the confidence in this system. That’s exactly what happened in 2008.
Major currency movement and capital flows tell us that people are starting to panic.
It’s happening in Greece. And it’s happening in China.
Mr. Tao informed the audience that the capital flight from China in December alone amounted to $20 billion, and that was just from official channels. The true amount could be four times greater.
This is significant for a number of reasons:
a) It’s happening.
Tens of billions of dollars are fleeing China, which is arguably the largest economy in the world. This does not bode well at all for the global economy.
b) They’re admitting it.
Again, it’s ridiculously unusual for a senior government official, ESPECIALLY IN CHINA, to admit to an audience, “yeah, people are taking their money and getting the hell out of dodge.”
Moreover, Tao even told his audience that China’s financial conditions “looks more and more like the Asian financial crisis” of the 1990s, and that we can “sense the atmosphere of the Asian financial crisis is getting closer and closer to us.”
(Our Chief Investment Strategist said the exact same thing last year.)
Such brutal honesty is certainly welcome. But it’s akin to career suicide.
c) If people are taking their money out of China, with all of its growth and savings, what does that say about other bankrupt nations?
Europe is a complete basket case and will likely go from bad (Greece) to worse (Italy).
Japan is a terminal failure, currently spending over 25% of its tax revenue just to pay interest.
And, perhaps just due to process of elimination, everyone seems to be looking to the United States as the beacon of growth and stability right now.
I’m sorry but this just doesn’t compute.
The US Federal Reserve on a mark-to-market basis is borderline insolvent. The US Federal government actually IS insolvent (based on their own financial statements).
The US banking system is EXTREMELY illiquid and has once again loaded up on risky loan packages (more on this in another letter).
How exactly is this safe?
It’s not. In fact, it’s downright ugly. And not even less ugly than the others.
Bottom line, there are very few safe places out there. Each of the governments has royally screwed up, and at this point, they’re all interconnected.
Greece and Italy cannot fail without devastating much of Europe. Europe cannot suffer without causing problems in China. China cannot slow down without causing major problems in the rest of the world.
Everything is connected.
So it’s simply wishful (and foolish) thinking to simply presume that the US, with its $18 trillion debt level and nearly insolvent central bank, can somehow be ‘all good’ while other nations are hemorrhaging cash.
Be mindful of the risks in the system. Don’t hold everything in the illiquid banking systems of bankrupt countries.
These are important decisions: where you hold your savings matters. Seek out countries with low (or zero) debt that have well-capitalized, highly liquid banks.
And if you haven’t done so already, definitely consider trading in at least a portion of your paper currency for a real asset like gold and silver.
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Mr. Tao, meet Mr. Firing Squad.
It's the Fed way...
Gets to pick target to stand on at Peoples Most Great mortar range.
"You're Friered!"
~Donard T
If they weren't shoving it all into Australian Real Estate & farming I wouldn't mind so much.
ps FIRB (Foreign Investment Review Board), Tony 'Hey!' Abbott, Matthias 'Martin Bormann' Cormann, Smokin' Joe Hockey & the previous 2 successive governments can ALL go and fuck themselves with an iron stick. The same iron stick. No washing.
Someone remind me... is China an enemy or an ally in WWIII?
Dude
We have always been at war with Eastasia.
Remember?
We shall remember the exact day that the music of the financials died.
For many generations.
Sum Ting Wong, sad "Ho Li Chit"
George Soros where are you? Opportunity knocks.
On the WW2 note, I agree with Patton, the US was on the wrong side. We should have been killing the communists and leftists, not the Germans.
Lots of HK'ers also jumping ship [and taking their money with them] after the crackdown by Beijing on the pro-Democracy people there. NYT has an Op-Ed about this and I notice 2/3 new Asians in my neighborhood are from HK. The other is from SK.
Beijing is selling dollars. Hong Kongers are buying them. And Washington is printing them.
curiouser and curiouser
www.usdebtclock.org
THE END!
It's going to be a very loud "POP' and it will be heard round the world.
'That POP heard round the world will mark the end of the roller-coaster ride which began at Concord Bridge when "the shot heard round the world" was fired.
That all depends on the calculus of which side will benefit China most.
Everyone seems to truly believe China will go with Russia. Still, they keep playing the CB fiat game. They have a huge population and no resources. Russia has huge resources and no population. Should China build a massive sea and air power to take on the US or take advantage of their inherent strength of numbers? Sail and/or fly to the US or walk to Russia. Of course they could just sit by while Russia and the US wipe each other out and then walk in and clean up both remnants plus Europe in order to conquer three continents. At that point, Africa, South America, and whatever other survivors remain will easily fall under China's sway.
That is just one way I can imagine a long game playing out.
Now that Canada has closed the door for Chinese, the US has opened it. They are buying sight unseen realestate anywhere they can think...
... and 10-year Visas are pretty sweet for them. NAR must have leaned pretty heavily on some Folks.
That guys face is too small for his head.
how do you say "nailgun" in chinese?
"Hore Deprot" ?
Wong ho
Wong ho Lo
after reading this it is time to move that prepping to the front burner!
sumtin gonna break loose at the base and down comes the whole shebang.
i envision janet holding an emergency meeting and allocating 25-40 trillion of liquidity to keep it together. even that is dicey with the assets being impared and illliquid, but it was done once.
or the reset finally happens.
i ask where is all that money from china going? r.e. in merica for one, but where else?
Canada, Australia, New Zealand, Latin America, Africa - China is on a buying spree around the world. There is some sensationalism in this article. Even if 80 billion leaves the country, the money is being used to set up businesses that benefit the host country and will benefit China in the long run just as US imperialism and British imperialism and French imperialism benefitted those empires, at least for a season.
True but maybe not really. Was it not the imperial overseas holdings that ultimately broke all of the European empires - they can quickly become a money suck if not managed well or brutally enough. Besides, the global economy has tanked. We are just starting to see the fallout. China relies on the global economy probably more than the global economy relies on China. They, reportedly, have not racked up the kind of real wealth (too short of a timeframe for that considering they aren't actually dominant in anything but excessively cheap/free labor) to carry forward as the leading economy in a swamp full of quicksand. At least the European empires had decades to amass great wealth that they could then use to get by until they were broke (from within) or broken (from without).
Just my $0.02 which is actually more like four cents by weight if you have older pennies. The fact that we here know that is a testament to how bad we believe things will get.
The lemmings dont watch financial news so the 10 people who saw it won’t really matter.
It’s just depressing how people are all still so confident that everything will skyrocket higher.
yesterday I was talking to some young kids of 25 something and all where really eager to go into massive debt to buy a crappy home... because it rises 10% a year...
you just can’t explain them that’s not true anymore but hey... they can still have their dream while wearing the iron debt shackles.
and than they where all talking about buying a new car and all... it was like all those kids make director wages which they don’t.
Than I talked to them about buying some gold and silver... man o man... their eyes where like black holes.
all they know is what mommy and daddy told them and nothing else exists.
And these kids take on massive debt! They’ll make 1 million in their lives and they all start with a 250k loan for a crumble house on which they’ll have to pay 500k when interest is included and that’s without expenses like a car and food.
they where really the iphone generation who is totally fucked.
All they are concerned is that with that det, they ecome rich...
if you look at it up close you really understand the debt paradigm... and these lemmings don’t have a clue.
I’m just that crazy old guy of 38 with his coins... depressing to see...
It will doesn't matter soon. You will have to live a year with 5k $ average. You will have cut living expenses by ~ 6 times.
I don't know how you will do it without civil war.
human beings don't require fed-printed debt notes to live.
if you have a plot of land you own outright and can grow a bit of food on it, you're doing fine.
if not, work towards that goal. just my .02
i was talking with my friends wife who suggested I go work for a hedge fund as its a easy way to get rich. this is the image that is put out there, rather than hedge fund managers that are commiting suicides, rapists and serial killers. they do not see that wall st has been a breeding ground for sociopaths.
It is really hard to make friends anymore. All people my age (20s) have these fantasies about the Amerikan Dream and believe only what mommy and daddy said. It is so bullshit. Whenever you try to give them a dose of reality they just give you the what the fuck face. I guess they'll just have to learn the hard way when this bitch has the rug taken out from the bottom. Wish there were zh'ers where I live so I had friends who see the REAL reality. It is hard hanging out with people that believe in bullshit dreams that sadly will never happen. Hangout talks are all about acquiring houses, cars, degrees, flights, vacations, 6 figure paying jobs, etc like we are in a recovery when we all know its a wreckovery. I tell them college debt is absurd, gold and silver is worth, live within your means, stick with your family, learn to grow, become friends with neighbors, stock essentials, etc and they look at me like i'm a crazy maniac who's talking out of his ass. I tried. Good day zh'ers .
ZH (ZombieHigh) KCCO , Keep Calm...
You will watch your friends go thru all 5 stages of Grief. From Denial to Acceptence. Keep your head. Keep reading, Learning.
Have a read on this by Kipling.
IF
http://www.poetryfoundation.org/poem/175772
I just turned 63 and I know how hard it is. You will meet people you can talk to, It's like gravity.
Thank you for the link. Really enjoyed it. Have a wonderful night.
As the other guy said, Get what ever money you can out of Electronic formats. If you have to talk to somebody to get Your money, It Ain't Your money.
Try saving $20 bucks a week/month. Go to a local coin dealer, buy American Eagles, or Canadian Maple Leafs 1oz Ag coins. 20$ +/- .
You can hide them like a roll of quarters Somewhere where you live. As the other guy said, Tell NO one your plans or preps. If possible do a garden if you can, connect to REAL things and Real Skills.
Good Luck. There are young people who think like you do, And there are Old people who think what you do. Throw out a couple questions or topics, see how the person responds. If they seem to already know what you are talking about, go further, feel them out. If not, Drop the subject.
You might be able to explain it, but you will never understand it for them.
Each person is on their own trajectory. Some are going the similar path as you, other Not so much...
if you can save 3 bucks a day
you can purchase an oz of silver a week
follow this pattern for a year
and you will a fine start
on a fiat free financial future...
ZBH
Consider too the need to protect yourself from desperate opportunists if/wben the proverbial fanflingflies off. By example, there are a couple young adults that take what I say seriously, and one of the first things I tell them is to find a way to save money, but tell zero of your family/acquaintances what you are doing that way. This ties in with the suggestion that they keep excess/discretionary funds outside the banking system.
Too many, essentially all, young people ignore or don't see that they should look/watch for those individuals in the older gernerations who share similar sentiments/outlook that are willing to work with them. There are older people who, at least subconsciously, want to find "kindred souls" in the younger generations, but the lack of common sense and a work/learning ethic creasts too much a barrier. Talk to people (without expecting anything in return) so they can get a sense of what you're made of, and then maybe thy will come back to you on their own initiative. Watch/test for "con"fidence head-games in any case though.
Best wishes for you.
I've definitely thought about this before but thanks for the tip! Will be looking out for the older generation that still have common sense ;)
ZomBiEHiGH - it's not just the 20 somethings that 'think' the way you described. (After all, they got the brainwashing from family, 'schools', mass media etc). The vast majority are like this and I'd guess that there are quite a few of us here on ZH who do not know a single person face-to-face who really has a clue of what's going on in the world. We have provided these people with plenty of information, but they have deliberately chosen Ignor-ance. (A term used by speaker Mark Passio.) We've discovered that their problem isn't intellectual, but emotional. They lack the courage to question their own programming and will have to go through a lot of suffering till they're ready to do that, if they ever choose to do so.
You're not alone. There are many of us out here of all ages that know exactly how you feel.
Hang tough kid. Even if it all is fixed tomorrow and we're all wrong as we can be, avoiding college debt, acquiring gold and silver, living within your means, prizing your family, learning to grow, becoming friends with neighbors, and stocking essentials are all a pretty good guide to life mate :) :)
Good life indeed! One thing for sure though, I never regret taking the "red pill".
Those kids might be right - the home might appreciate 10% in a year. Of course their wages will increase by less than the inflation rate (both official and real) and everywhere else they might want to live will cost 10% more in a year too. So yeah, the price might go up but the value can still go down.
And I thought rocket surgery was tricky.
I have his six.
my buddy's ex-wife makes $71 /hr on the laptop . She has been laid off for nine months but last month her check was $16333 just working on the laptop for a few hours. visit sitewww.globe-report.com
WTF is up with that picture? He looks baked.
How can we take anyone who looks like that seriously?
He looks like he could be a cousin of the Ali-Baba guy.
The Chinese Jim Breuer.
I also like the crooked glasses and the clip-on. Nice touch.
so looking good is your primary criteria for credibility...
Not looking good, looking sane.
I think he's cute in a dumb, fat kinda way.
Typical Americans who are more taken in by external looks & b.s. "smoothness" than substance. Too much time spent in front of t.v. and Hollywood movies.
This guy is responsible for huge amounts of money. If he's typical Chinese leadership, he probably has an advanced degree in science or engineering.
You obviously have not seen Crimea's prosecutor.
I'd be more worried about where that capital is going...
in southern california, I would say alhambra and irvine. lot of Chinese mc mansions and super cars around those parts.
Rumor has it that it is literally stacked up on container ships sitting on the coast of California.
they fixed all in 2009 don't worry. To big to jail.
His head looks as inflated as their GDP numbers.
It's Ted, murderer of MJ KOpechne, sized.
Some bad guys are acting like good guys.
Mr Tao has since retracted his statement, stating that he had his glasses on upside down when examining the data.
Everything is vely fine, really.
No, weally;)
Practicing self sufficiency as a hobby is much more fun than practicing it as a necessity. Soon, seven billion people will learn this the hard way.
Actually, about five and a half billion are very well practiced at it.
more and more people waking up to reality. it has to be dealt with sometime. moral hazzard has been ignored for too long and it is coiled up and ready to spring.
The "Human Turtle"?
In North Korea and Communist China .... plump is good .... like the plump ladies of Renaissance art !
Dead man walking.
crazy as it seams in china they kill corrupt officials rather than rewarding them. no nailguns just firing squads. that should speed up the reform process.
Yes, considering that there has never been any pretense of free speech in China,
someone in power is not amused by this shit.
Guan Tao told the truth because he was told to tell the truth.
The end game is upon us. The fiat bubble is about to burst.
Keep stacking, sit back, and watch the apocalypse in HD!!!
yah he got the hint when they executed the corrupt official last week. china is throwing down the hammer and make sure people get the message without confusion. unlike the west who relies on confusion.
SPOT ON
Propaganda 101.
Have a credible source tell the world (US) what you want it to think.
Then make a front page, big deal about firing him, to make his "statement" akin to the Gospel.
Continue to pay him (plus a bonus) and a few months later after the markets and governments have reacted to his "statement", kick him upstairs to a corner office with large windows and a view of the fForbidden City.
And make sure he has an early stop by the donut wagon in the mornng, before all the crumb donuts are gone.
I keep all my savings as ES collateral. I only have to put up $300/contract.
more from Haver Analytics
Philadelphia Fed Business Conditions Index Falls To 12-Month Low
http://www.haver.com/
The seasonally adjusted figure, constructed by Haver Analytics, improved moderately to 51.7. Despite the gain, it was the lowest figure since March. It is comparable to the ISM Composite index.
During the last ten years, there has been a 71% correlation between the adjusted Philadelphia Fed index and real GDP growth
Kim Jong Un has an amazing new haircut. We have many, many questions.
http://www.vox.com/2015/2/19/8069897/kim-jong-un-has-an-amazing-new-haircut-we-have-many-many-questions
I realy miss captcha > basic algebra/ Tyler. 120th = 1minus 20
Probably slowed the growth of the blog for the first couple of years.
Either the negative values didn't compute, or I didn't.
Under authoritarian governments competence and truthfulness is a fatal combination.
Pity that authoritarianism is all the rage this century. They all are now authoritarian. Not one National Government is for limited powers, protecting rights by enforcing a small tightly defined set of laws... and a great deal of hands-off with regard to everything else.
Man is more given to driving his neighbor to construct his personal vision of utopia, than to allowing each to enjoy what personal utopia they can.
The Obama administration to a TEE,
http://www.theguardian.com/world/2013/oct/20/young-people-japan-stopped-...
http://www.digitaljournal.com/article/360704
http://www.dailymail.co.uk/news/article-2918747/Nearly-half-Japanese-adu...
So that is what is driving the stock market here. Obvously!
China arguably the worlds largest economy? Uh. In per capita, the chinese make about $5k a year, That is the size of our economy back in....what...1910? It has been estimated their real GDP in USD equivalent to about 10 trillion. They are nowhere near us. Other than that remark everything else makes sense.
1B people making $5k a year is $5T. We have 150M people with an average salary of $30K. I prefer China's GDP. The salary portion of the GDP is the only meaningful data point. Everything else comes from that.
For serious now! All those nailguns made in China and this guy won't get a free nailgun delivery for early retirement?
Nailgun.
Soaker tub.
He will get some sort of special delivery I'm sure.
Then his family can re sell it as a lightly used item later.
ah yes, good old point c)
who gives a flying fuck what it means about other countries? that's not the subject at hand, the subject at hand is China...
take your misdirection bullshit somewhere else, because you know damn well where the $20B is going _to_ and it sure as hell isn't Russia...
All the thieves are abandoning China's ship?
Why, with so much more to loot?
In the late Eighties, the Japanese took their money out of Japan and bought huge amounts of bubble-priced American real estate. They lost bigtime when the market crashed. Now some Chinese are doing it. It's not a sign of intelligence or being "in the know". It's a sign of not even having a 30 year window of history.
Couldn't stand the band or the song, but it did pop in my head.
https://www.youtube.com/watch?v=GbwGv6g7Y-U
WWW.USDEBTCLOCK.ORG
THE END!
Some simple advice for the financially anxious:
Practice basic capitalism.
1. Defer consumption.
2. Buy productive assets.
3. Produce goods and services that other people need.
4. Produce more than you need for youself.
5. Trade.
6. Repeat.
You figure out the details.
Simon, this is mostly the crackup boom in the US Dollar.
Which side will the Chinese be on for WWIII ?
In any case, they are investing a lot of money on being prepared for it strategically .
http://www.lefigaro.fr/international/2015/02/21/01003-20150221ARTFIG00048-pekin-etend-son-emprise-en-mer-de-chine-meridionale.php