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The Great China Ponzi - An Economic And Financial Trainwreck Which Will Rattle The World
Submitted by David Stockman via Contra Corner blog,
There is an economic and financial trainwreck rumbling through the world economy. Namely, the Great China Ponzi. In all of economic history there has never been anything like it. It is only a matter of time before it ends in a spectacular collapse, leaving the global financial bubble of the last two decades in shambles.
But here’s the Wall Street meme that is stupendously wrong and that engenders blind complacency with respect to the impending upheaval. To wit, the same folks who brought you the myth of the BRICs miracle would now have you believe that China is undergoing a difficult but doable transition - from an economy driven by booming exports and monumental fixed asset investment to one based on steady as she goes US-style consumption and services.
There may well be some bumps and grinds along the way, we are cautioned, such as the recent stock market and currency turmoil. But do not be troubled—–the great locomotive of the world economy will come out the other side better and stronger. That’s because the wise, pragmatic and powerful leaders and economic managers who deftly guide China’s version of capitalism have the capacity to make it all happen.
No they don’t!
China is not a clone-in-the-making of America’s $18 trillion consume till you drop economy—-even if that model were stable and sustainable, which it is not. China is actually sui generis—–a historical freak accident that has no destination other than a crash landing.
It’s leaders are neither wise nor deft economic managers. In fact, they are a bunch of communist party political hacks who have an iron grip on state power because China is a crude dictatorship. But their grasp of the fundamentals of economic law and sound finance can not even be described as negligible; it’s non-existent.
Indeed, their reputation for savvy and successful economic management is an unadulterated Wall Street myth. The truth is, the 25 year growth boom in China is just a giant, credit-driven Ponzi. Any fool can run a central bank printing press until it glows white hot.
At the end of the day, that’s all the Beijing suzerains of red capitalism have actually done. They have not created any of the rudiments of viable capitalism. There are no honest financial markets, no genuinely solvent banks, no market driven allocation of capital and no financial discipline which comes from the right to fail as well as succeed.
There are, for instance, 287 million equity trading accounts in China, most of them opened within the last year and overwhelmingly held by retail punters with sub-high school educations. In less than 12 months they took down upwards of $1 trillion of margin debt through official brokerage channels and a massive network of shadow banking sources including dodgy peer-to-peer lending arrangements.
So fortified, they clambered after a stock market bubble that expanded by $3 trillion in just 60 trading days ending on June 14, and then broke into a panicked selling stampede that liquidated that very same $3 trillion of bottled air in hardly 20 trading days thereafter.
Then the state sent out the paddy wagons to arrest and intimidate the panicked sellers and threw-open the central bank’s credit lines to fund hundreds of billions of unwanted stocks. That is not capitalism, red or otherwise; it’s desperate, mindless madness.
Likewise, there are no credible institutions of contract law and bankruptcy. There is not even minimally honest corporate financial reporting and no restraints at all on the propensity of China’s newly affluent masses to gamble in real estate, stocks, commodity financing schemes, dodgy private lending clubs, chain letters and endless similar get rich quick schemes.
Most importantly, there are no lines of demarcation between the property of the state and the license of officialdom and their cronies to expropriate it. In a word, China wallows in the greatest cesspool of corruption known to history because that’s what happens when you erect a $10 trillion command economy virtually over night.
And the swaying edifice of red capitalism has indeed been stood up overnight. At the time that Mr. Deng radically changed the party line——proclaiming that it is glorious to be rich and the PBOC slashed the RMB exchange rate by 60% in 1994 in order to jump start an export boom——there was less than one half trillion dollars of credit market debt outstanding. Alas, that figure today is $28 trillion according the cautious reckoning of McKenzie, and most likely far more.
Here’s the thing. You can not safely, sanely or efficiently grow by 56X in hardly two decades something as combustible as cheap, come-and-get it state supplied credit in an environment where the rudiments of market capitalism do not even exist. If you pursue that kind of financial Frankenstein, that’s exactly what you will get, and that’s what the comrades in Beijing actually got.
Now, however, the iron law of financial bubbles has caught up with them. That is, when you stop supplying increasingly massive amounts of new credit to what eventually becomes an elephantine bubble, it begins to fall inward.
This happens slowly at first, then with accelerating momentum, and finally culminates in a panic-riven meltdown. That sequence encapsulates the entirety of the 2006-2008 securitized mortgage meltdown on Wall Street, the late 1980s and early 1990s Tokyo real estate boom and bust, the 1979-1980 silver and gold bubbles and countless others stretching back centuries in time.
So the passive-aggressive posture of China’s officialdom about what even they recognize as the out-of-control credit bubbles in their realm has no rhyme or reason. Beijing’s recent hoping from one foot to the other, first stimulating and then braking, is rooted in pure desperation and seat of the pants adhockery.
Wall Street sees none of this, however, and for a reason dripping with irony. Namely, since the ascension of Alan Greenspan to the Fed in 1987, the epicenter of world capitalism——that is, the money and capital markets of Wall Street—-has fallen prey to a regime of monetary central planning. Price discovery in the financial auction markets has been supplanted by price administration decreed by the twelve mortals who comprise the FOMC. A monetary politburo, if you will.
Not only has this increasingly heavy-handed central bank intrusion falsified financial asset prices, subsidized rampant carry trade speculation, eliminated an honest risk-reward calculus and destroyed short sellers and other natural instrumentalities of financial discipline, but it has also drastically changed the culture of the financial markets.
The overwhelming share of players in what has become a central bank enabled casino are now de facto statists. They believe that the agencies of the state can and should peg money market interest rates, prop up the bond market via massive monetization of the public debt, and eliminate “contagion” outbreaks in the equity and other risk asset markets.
Except “contagion” is a red herring. Its just another name for old-fashioned market breaks and bear raids on speculative excesses and reckless leveraged gambling. This kind of bear market liquidation is essential for healthy capital and money markets, but its been extinguished by the Greenspan/Bernanke/Yellen “put” and the casino’s overwhelming conviction that the central bank will flood the market with liquidity should another Lehman-style meltdown ever manage to incept.
All of this adds up to the conviction that governments drive the process of economic growth and wealth creation and that capitalism thrives best when it is nourished and guided by the helping hand of the state, most especially its central banking branch.
Needless to say, that self-serving but misbegotten ideology would never have taking root in Wall Street 50 years ago. In the days when the great William McChesney Martin took away the “punch bowl” just six months after the 1957-1958 recession ended by a series of stiff interest rate increases and by raising stock margin requirements to 90% of market value, the captains of finance would never have dreamed of 80 straight months of zero money market rates, as has now occurred.
They would have been screaming to high heaven that such radically unsound finance was a mortal danger to the nation’s wealth. By contrast, today they think they are entitled to central bank “accommodation” for as long as might be necessary to keep the stock averages rising. So while 80 months of ZIRP is nothing less than a recipe for massive speculation that will inexorably lead to a resounding bust they don’t even notice the danger.
Worse, the Wall Street casino inhabitants have no clue that while bubble finance is dangerous enough in a relatively mature capitalist economy like that of the US, it is pure monetary nitroglycerin in a setting like the China credit Ponzi.
Nor do they have the slightest inkling that PBOC head, Zhou Xiaochuan, is not just an Asian version of Janet Yellen who wears trousers and dyes his hair black.
Stated differently, Wall Street cannot see straight when it comes to China because its crypto-Keynesian lenses lead it to suppose Mr. Zhou will stump up whatever liquidity and bailouts may be necessary and that his colleagues in Beijing will open the fiscal stimulus spigots if growth continues to falter.
Well, Mr. Zhou may talk the idiom of central banking, but he’s just a servant of the communist overlords whose overwhelming purpose is to stay in power and whose colossal economic and financial ignorance will lead them to destructive expedients that will make the paddy wagon brigades now combing the brokerage houses look mild by comparison.
Its too late for a soft landing and managed deflation of the Great China Ponzi. But in their desperation to forestall the inevitable crash, the suzerains of red capitalism will increasingly turn to the mailed fist of state repression.
For instance, the Chinese steel industry grew by 11X during the last 20 years, expanding from 125 million tons, which was already larger than the US and Japanese steel industries in the mid-1990s, to 1.1 billion tons today. But neither China nor the world can use that much steel, even as China’s aggressive “dumping” on the world market gathers force.
In fact, China’s steel production is already swooning—–with output in the most recent month down nearly 5% Y/Y and prices off 26% since January and 40% since the three-year ago peak. During the first half of 2015, China’s large and medium steel mills spewed $3.5 billion of red ink, and that just a warm up for the carnage yet to come.
In a word, China has upwards of 400- 500 million tons of steel capacity that will be idle once its construction boom stops and the rest of the world throws barriers up against its exports. That amounts to economically destructive malinvestment on an unprecedented scale. The idling of China’s giant steel mills, in turn, will create an economic void which will cause a massive collapse of business, employment and incomes up and down the iron and steel food chain.
Likewise, China’s construction infrastructure is grotesquely overbuilt from cement kilns, to construction equipment manufacturers and distributors, to sand and gravel movers, to construction site vendors of every stripe. For crying out loud, in three recent year China used more cement than did the United States during the entire 20th century!
That is not indicative of a just a giddy boom; its evidence of a system that has gone mad digging, hauling, staging and building because there was unlimited credit available to finance the outpouring of China’s runaway construction machine.
To get a feel for this outbreak of collective insanity, look at Shanghai’s financial district in 1987 and again in 2013:
The setting is Shanghai’s financial district of Pudong, dominated by the Oriental Pearl Tower at left, and the new 125-story Shanghai Tower, China’s tallest building and the world’s second tallest skyscraper, at 632 meters (2,073 ft) high, scheduled to finish by the end of 2014. Shanghai, the largest city by population in the world, has been growing at a rate of about 10% a year the past 20 years, and now is home to 23.5 million people — nearly double what it was back in 1987.
Or take a gander at China’s ghost cities, fully equipped with everything, except people. This is merely an example of the stunning economic waste which covers the Chinese landscape:
In short, China’s freakish economy is just one great collection of impossibilities that cannot be stabilized or propped-up much longer. But in their desperation to forestall the inevitable crash, the suzerains of red capitalism will increasingly turn to the mailed fist of state repression.
Indeed, the can’t any longer rely on the proposition that party power comes from the end of Mr. Deng’s printing press. To do so will only exacerbate the massive capital flight that is already underway and which threatens a devastating further plunge of the RMB exchange rate.
The latter is the Achilles Heel of the whole Ponzi. To arrest capital flight they will have to do the opposite of what they have done for the last 20 years. That is, they will have to shrink the domestic money supply and banking system in order to sell dollars and euros rather expand domestic credit in order to sequester dollar liabilities (i.e. treasury bonds) in the PBOC.
In due course, China will be aflame with campaigns against corruption and enemies of the state as it seeks to cope with its collapsing financial bubbles and endless herds of economic white elephants. Chairman Mao’s axiom as to where state power really comes from——that is, the barrel of a gun—-will become the increasingly evident modus operandi of the communist party rulers.
The resulting deflationary spiral will suck the global economy into its vortex. And Wall Street will go down for the count because this time the Fed will be utterly powerless to reverse the tide.
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Good. Before we had a global economy America was doing pretty good. Maybe with the collapse it will come back.
What about Americas ponzi the US dollar? When is that gonna shake the world?
A taboo, badthink school of economics used the term 'malinvestment' but we've moved beyond all that now.
China's government is even more corrupt than America's. The Communist Party of China runs everything. They impose a top-down model of central planning.
Central planning never works. Well, maybe in planning deaths of dissidents and diverting wealth to the very top.
China will crumble. Watch and see.
The Chinese are truly irresponsible. They should have followed the US approach of honesty and transparency.
Let me get Bang De Ho on the line to discuss this new development since just last week Long Er Wong told me China would lead the world out of this depression.
I missed the title.
Was he describing America or China?
From the article (regarding China):
It’s leaders are neither wise nor deft economic managers. In fact, they are a bunch of communist party political hacks who have an iron grip on state power because China is a crude dictatorship. But their grasp of the fundamentals of economic law and sound finance can not even be described as negligible; it’s non-existent.
There are no honest financial markets, no genuinely solvent banks, no market driven allocation of capital and no financial discipline which comes from the right to fail as well as succeed.
In short, China’s freakish economy is just one great collection of impossibilities that cannot be stabilized or propped-up much longer. But in their desperation to forestall the inevitable crash, the suzerains of red capitalism will increasingly turn to the mailed fist of state repression.
From the comment above:
The Chinese are truly irresponsible. They should have followed the US approach of honesty and transparency.
+1, and I am sure your comment is sarc. WTF is Stockman trying to say? Is China a Ponzi? Hell yes! Is it any different form any other national Ponzi? Hell no!
Is America a crude dictatorship? Are our leaders either "wise" or "deft"? Have they any grasp of economic fundamentals? Just who is wielding the "mailed fist"?
Glass houses and stones, man.
idiots
No country can hold a candle to the US in the coruption stakes - If China's presses are running 'white hot' then the Weimar presses in the US must have melted ! The FED has printed 15 trillion since 2008 and 'lent' it to foreign banks - US have 'bought' vassals - infecting the rest of the world with an incurable,terminal disease - ECONOMIC COLLAPSE !
The U.S. Will be the last standing and the rest of the world a slave to it.
you're right, whether anyone likes it or not.
Yellen will raise rates and even more money will flood in to the dollar, Russia and China and all other markets will continue to tank as their debt service will rise and their exports become cheaper. We will get cheaper goods, inlcuding gold, as deflation gets worse, and should take advantage.
All will be good, until finally the US capitulates, at which point we all hold on to our gold and our asses and hope for the best, because it won't be pretty.
"Yellen will raise rates and even more money will flood in to the dollar, Russia and China and all other markets will continue to tank as their debt service will rise and their exports become cheaper."
I have doubts that Yellen will raise rates anytime soon. Yellen is all take and no action. They were going to raise in June, that didn't happen. Then during the Aug Fed meeting, Didn't happen. September? I doubt it. That said, the US may not raise rates, but is not going to deliberately devalue its current to support its export market as China & Japan do. The EU will also likely devalue in the next 6 to 10 months. The US will just remain the cleanest shirt in the laundry pile.
I do think the US is in or falling into another recession (or should I say faster rate of decline than in recent years). We has a Junk bond bubble ready to pop. Corporate debt imbalanced used to support stock buybacks (probably out of room to increase debt without corp credit downgrades), and a shale bubble ready to pop killing at least 250K good wage jobs.
"until finally the US capitulates, at which point we all hold on to our gold and our asses and hope for the best"
My guess is that we'll see WW3 before a major industrial power capitulates. Recall the US blew up the Middle east after the dot-com bubble popped and still continues to expand warfare in the ME, and also starting new fronts on Russia and China. As I see it, US powers that be, aren't going down with out a fight. They rather start WW3 and force the entire world to die with them, rather than giving up control. Remember the people in control are the ultimate narrasists.
Hard to look at history for a guide, in prior times we had either the USD or the all-powerful Pound Sterling or gold and silver as measuring sticks, today we just have paper games on all sides. What will happen and is happening is the decline in the standard of living, as Stockman says "nations trying to make their country richer by making their people poorer", increasing devaluations until some kind of financial singularity. But it's frog boiling, so long as you control the narrative the frogs are too stupid to jump.
Yellen won't raise rates - Rates go up - the economy goes down - This of course is an intended COLLAPSE - Welfare is unsustainable - the government no longer want a population of LIABILITIES !
The U.S. will be the last staggering and the rest of the world a streaming toward it as migrants.
Fixed it for you.
When China collapses as Stockman describes, how many people do you think will be running for the exits (literally, not figuratively) and trying to settle in the US, Canada, Australia, Europe -- any place still somewhat run by bignose?
"What about Americas ponzi the US dollar? When is that gonna shake the world?"
Probably for quite a while, since every other nation is also in the same ponzi scheme. It appears that the US dollar will probably been one of the last ships to go down. China's, Japan, the EU, South America, Africa, Austrialia, etc are all insolvent, and primed for a major retraction. The US is in terrible shape but not as bad as China and the EU. The US is morphing into a socialist system, but the EU has been in a socialist system for decades. China, did industrial keynesism, but pouring capital/debt into building over-capacity and ghost cities, but it coming to an end. The only way I can see China continue its industrial keynesism is to switch to miltary keynesium and do a mass buildup of arms, which is later used on its neighbors to secure resources.
FWIW: I think we will see lots of civil disobeyence in Asia and the EU in the not too distant future, as the global economy slipped into an even deeper, darker recession/depression. The US will continue muttle through. There will be more job loses, higher taxes, higher living costs, etc, but its likely to press on, at least for five or more years. As long as the super markets have stocked selves, Social Security checkes and the EBT cards continues, there would be a full economic collapse in the US.
I will believe it when I start to see scumbag politicians fleeing the country, until then...BITE DOWN HARD!
Ummm hate to break it to you but they already are.
The top commies are fleeing? Why?
Wealthy Chinese are buying up real estate from London to Manhattan to Sydney. Many upper class Chinese women are also giving birth abroad so their children have easier access to dual nationalities.
In the bubblicious SF Bay area this is the case. Realtors from go to China on "buy american real estate" road shows to bring in more business. Might even be a good deal for them vs domestic investments. There's still some chance of a snap back to rule of law here. TBD.
But all chinese are dumb according to ZH and if the properties aren`t in a spreadsheet ZH can crunch, it doesnt exist.
List or link please?.....
they have already started fleeing for several years, don't you see all the luxurious houses and apartment were bought by chinese wealth, and their kids have been swamping into US education campuses?
they have already started fleeing for several years, don't you see all the luxurious houses and apartment were bought by chinese wealth, and their kids have been swamping into US education campuses?
I was referring to US scum...
"I was referring to US scum..."
In the US Bunkers and safe rooms have been a hot seller. Some 0.1% have bought property overseas (new Zealand and Austrialia). Austrialia recently increased is US residence Visa to $15M. I believe a few years ago it was 1 or 2 Million. so $15M is a steep increase. I am not sure if this is because there has been a flood of people seeing to immigrate to AUS. Although it probably an increase from China.
http://www.reuters.com/article/2015/07/12/us-australia-usa-immigration-i...
http://www.nytimes.com/2015/05/26/nyregion/still-secret-and-secure-safe-...
You would have to go back to 1492 then.
US Ponzi is apparent for all to see.
TAF, TALF, Auction facility loans, lender of last resort, ZIRP Loans. The average balances seem to be above $10 Billion a day.
Bank of America Corp.,Bank of America Corp.*,,,,,,,,,,
Ticker,BAC US Equity,,,,,,,,,,
Includes Loans to:,"Banc of America Securities LLC, Banc of America Securities LLC, Banc of America Securities LLC, Banc of America Securities LLC, Bank of America NA, Bank of America Corp., FIA Card Services NA and Bank of America NA",,,,,,,,,,
Identified in Fed Documents as:,"BANC OF AMER SCTY, Banc of America Securities LLC, Banc of America Securities LLC, Banc of America Securities LLC, BANK OF AMER NA, Bank of America, FIA CARD SVC NA and BANK OF AMER NA",,,,,,,,,,
Capital Raised From Home Governments,"$45,000.00",,,,,,,,,,
Programs,"AMLF, PDCF, TSLF, ST OMO, TAF, CPFF, TAF, DW",,,,,,,,,,
Country,United States,,,,,,,,,,
Industry,Banking,,,,,,,,,,
"Average Daily Balance
From 8/1/2007 to 4/30/2010","$20,712.39 ",,,,,,,,,,
Peak Amount of Debt,"$91,400.00 ",,,,,,,,,,
Peak Date,2/26/2009,,,,,,,,,,
Lehman Brothers Holdings Inc.,Lehman Brothers Holdings Inc.*,,,,,,
Ticker,LEHMQ US Equity,,,,,,
Includes Loans to:,"Lehman Brothers Holdings Inc., Lehman Brothers Holdings Inc., Lehman Brothers Holdings Inc. and Lehman Brothers Holdings Inc.",,,,,,
Identified in Fed Documents as:,"Lehman Brothers Inc., Lehman Brothers Inc., Lehman Brothers Inc. and LEHMAN BROTHERS BK FSB",,,,,,
Capital Raised From Home Governments,$0.00 ,,,,,,
Programs,"PDCF, TSLF, ST OMO, DW",,,,,,
Country,United States,,,,,,
Industry,Diversified Financial Services,,,,,,
"Average Daily Balance
From 8/1/2007 to 4/30/2010","$3,121.20 ",,,,,,
Peak Amount of Debt,"$46,023.00 ",,,,,,
Peak Date,9/15/2008,,,,,,
Barclays Plc,Barclays Plc*,,,,,,,,,,
Ticker,BARC LN Equity,,,,,,,,,,
Includes Loans to:,"Barclays Bank Delaware, Barclays Bank PLC/NY, Barclays Bank PLC/NY, Barclays Capital Inc./Old, Barclays Capital Inc./Old, Barclays Capital Inc./Old, Barclays PLC and Barclays Bank PLC/NY",,,,,,,,,,
Identified in Fed Documents as:,"BARCLAYS BK DE, BARCLAYS BK PLC NY BR, BARCLAYS BK PLC PARK AVE BR, Barclays Capital Inc., Barclays Capital Inc., Barclays Capital Inc., Barclays PLC and BARCLAYS BK PLC NY BR",,,,,,,,,,
Capital Raised From Home Governments,$0.00 ,,,,,,,,,,
Programs,"TAF, TAF, TAF, PDCF, TSLF, ST OMO, CPFF, DW",,,,,,,,,,
Country,Britain,,,,,,,,,,
Industry,Banking,,,,,,,,,,
"Average Daily Balance
From 8/1/2007 to 4/30/2010","$19,105.23 ",,,,,,,,,,
Peak Amount of Debt,"$64,890.20 ",,,,,,,,,,
Peak Date,12/4/2008,,,,,,,,,,
Merrill Lynch & Co. Inc.,Merrill Lynch & Co. Inc.*,,,,,,,,,,
Ticker,MER US Equity,,,,,,,,,,
Includes Loans to:,"Merrill Lynch & Co. Inc., Merrill Lynch Bank USA, Merrill Lynch Government Securities Inc., Merrill Lynch Government Securities Inc., Merrill Lynch Government Securities Inc., Merrill Lynch Government Securities Inc., Merrill Lynch Bank USA and Merrill Lynch Bank & Trust Co. FSB",,,,,,,,,,
Identified in Fed Documents as:,"Merrill Lynch & Co, MERRILL LYNCH BK USA, Merrill Lynch Government Securities Inc., Merrill Lynch Government Securities Inc., Merrill Lynch Government Securities Inc., Merrill Lynch Government Securities Inc.-London, MERRILL LYNCH BK USA and MERRILL LYNCH BK&TC FSB",,,,,,,,,,
Capital Raised From Home Governments,"$10,000.00",,,,,,,,,,
Programs,"CPFF, TAF, PDCF, TSLF, ST OMO, PDCF, DW, DW",,,,,,,,,,
Country,United States,,,,,,,,,,
Industry,Diversified Financial Services,,,,,,,,,,
"Average Daily Balance
From 8/1/2007 to 4/30/2010","$8,332.66 ",,,,,,,,,,
Peak Amount of Debt,"$62,116.50 ",,,,,,,,,,
Peak Date,9/26/2008,,,,,,,,,,
Wells Fargo & Co.,Wells Fargo & Co.,,,
Ticker,WFC US Equity,,,
Includes Loans to:,Wells Fargo & Co.,,,
Identified in Fed Documents as:,WELLS FARGO BK NA,,,
Capital Raised From Home Governments,"$25,000.00",,,
Programs,TAF,,,
Country,United States,,,
Industry,Banking,,,
"Average Daily Balance
From 8/1/2007 to 4/30/2010","$8,491.72 ",,,
Peak Amount of Debt,"$45,000.00 ",,,
Peak Date,2/26/2009,,,
Wachovia Corp.,Wachovia Corp.*,,,,
Ticker,WB US Equity,,,,
Includes Loans to:,Wachovia Bank NA and Wachovia Bank NA,,,,
Identified in Fed Documents as:,WACHOVIA BK NA and WACHOVIA BK NA,,,,
Capital Raised From Home Governments,$0.00 ,,,,
Programs,"TAF, DW",,,,
Country,United States,,,,
Industry,Banking,,,,
"Average Daily Balance
From 8/1/2007 to 4/30/2010","$6,878.00 ",,,,
Peak Amount of Debt,"$50,000.00 ",,,,
Peak Date,10/9/2008,,,
American International Group Inc.,American International Group Inc.,,,
Ticker,AIG US Equity,,,
Includes Loans to:,American International Group Inc.,,,
Identified in Fed Documents as:,American International Group,,,
Capital Raised From Home Governments,"$70,000.00",,,
Programs,CPFF,,,
Country,United States,,,
Industry,Insurance,,,
"Average Daily Balance
From 8/1/2007 to 4/30/2010","$5,422.50 ",,,
Peak Amount of Debt,"$16,195.70 ",,,
Peak Date,1/27/2009,,,
Citigroup Inc.,Citigroup Inc.*,,,,,,,,,,,,
Ticker,C US Equity,,,,,,,,,,,,
Includes Loans to:,"Citibank NA, Citibank NA, Citibank South Dakota NA, Citigroup Inc., Citigroup Inc., Citigroup Global Markets Inc., Citigroup Global Markets Inc., Citigroup Global Markets Inc. and Citibank NA",,,,,,,,,,,,
Identified in Fed Documents as:,"CITIBANK, CITIBANK NA, CITIBANK SD NA, Citigroup, CITIGROUP BROKER DEALER, Citigroup Global Markets Inc., Citigroup Global Markets Inc., Citigroup Global Markets Inc., Citigroup Global Markets Inc.-London and CITIBANK NA",,,,,,,,,,,,
Capital Raised From Home Governments,"$45,000.00 ",,,,,,,,,,,,
Programs,"AMLF, TAF, TAF, CPFF, AMLF, PDCF, TSLF, ST OMO, PDCF, DW",,,,,,,,,,,,
Country,United States,,,,,,,,,,,,
Industry,Banking,,,,,,,,,,,,
"Average Daily Balance
From 8/1/2007 to 4/30/2010","$19,739.16 ",,,,,,,,,,,,
Peak Amount of Debt,"$99,451.09 ",,,,,,,,,,,,
Peak Date,1/20/2009,,,,,,,,,,,,
JPMorgan Chase & Co.,JPMorgan Chase & Co.*,,,,,,,,,,
Ticker,JPM US Equity,,,,,,,,,,
Includes Loans to:,"JPMorgan Chase & Co, JPMorgan Chase & Co, JPMorgan Chase & Co, JPMorgan Chase Bank NA, JPMorgan Chase & Co, JPMorgan Chase Bank NA, Chase Bank USA NA and JPMorgan Chase Bank NA",,,,,,,,,,
Identified in Fed Documents as:,"J. P. Morgan Securities Inc., J.P. Morgan Securities LLC, J. P. Morgan Securities Inc., JP MORGAN CHASE BK, JP MORGAN CHASE BROKER DE, JPMORGAN CHASE BK NA, CHASE BK USA NA and JPMORGAN CHASE BK NA",,,,,,,,,,
Capital Raised From Home Governments,"$25,000.00",,,,,,,,,,
Programs,"PDCF, TSLF, ST OMO, AMLF, AMLF, TAF, TAF, DW",,,,,,,,,,
Country,United States,,,,,,,,,,
Industry,Banking,,,,,,,,,,
"Average Daily Balance
From 8/1/2007 to 4/30/2010","$11,978.98 ",,,,,,,,,,
Peak Amount of Debt,"$68,637.75 ",,,,,,,,,,
Peak Date,10/1/2008,,,,,,,,,,
Bear Stearns Cos. LLC,Bear Stearns Cos. LLC*,,,,,
Ticker,2942331Q US Equity,,,,,
Includes Loans to:,"Bear Stearns Cos. LLC, Bear Stearns Cos. LLC and Bear Stearns Cos. LLC",,,,,
Identified in Fed Documents as:,"Bear, Stearns & Co., Inc., Bear, Stearns & Co., Inc. and Bear, Stearns & Co. Inc.",,,,,
Capital Raised From Home Governments,$0.00 ,,,,,
Programs,"PDCF, TSLF, ST OMO",,,,,
Country,United States,,,,,
Industry,Diversified Financial Services,,,,,
"Average Daily Balance
From 8/1/2007 to 4/30/2010","$1,443.03 ",,,,,
Peak Amount of Debt,"$30,000.00 ",,,,,
Peak Date,3/28/2008,,,,,
OTS and FDIC Seized Assets and Debts of WAMU, later sold to JPM for $1.9 Billion who rebranded as Chase,
was left with $33 billion in assets, and $8 billion debt, after being stripped of its banking subsidiary by the FDIC.
Washington Mutual Inc.,Washington Mutual Inc.*,,,,
Ticker,WAMUQ US Equity,,,,
Includes Loans to:,Washington Mutual Bank/Henderson NV and Washington Mutual Bank/Henderson NV,,,,
Identified in Fed Documents as:,WASHINGTON MUT BK and WASHINGTON MUT BK,,,,
Capital Raised From Home Governments,,,,,
Programs,"TAF, DW",,,,
Country,United States,,,,
Industry,Banking,,,,
"Average Daily Balance
From 8/1/2007 to 4/30/2010",$210.41 ,,,,
Peak Amount of Debt,"$3,000.00 ",,,,
Peak Date,9/18/2008,,,,
Funny, Bear Sterns, Lehman, Wamu, Merill-Lynch, and AIG needed less than the TBTF Banks.
I'm just saying... maybe it was all about power.
Maybe the losers were picked to fail by the people in power.
- Not very much of a stretch, since in the USA Rumor is all you need to tarnish a reputation whether a presidential candidate, congressional candidate, or a ... Bank
And Wall Street will go down for the count because this time the Fed will be utterly powerless to reverse the tide.
Well, there's always a silver lining.
And at that time the curtain will be pulled back for everyone to see.
Ignorance is bliss untill the sudden stop.
yep
zh, you don't have to look up to China to learn about ponzism. I asked Mr. Stockman the same question. Solve the rental problem listed here. Of course I will provide the solution at some point. It is time you too give this a little thought. Yes, I have stated the problem very loosely. Modify it however you want. The answers you are looking for are always in your own backyard. Why do you have to go to China?
http://just-a-thought-from-thinair.blogspot.com/2015/07/irrational-marke...
http://just-a-thought-from-thinair.blogspot.com
and herein lies the flaw with all of these arguments... on one hand you cry when china-backers point at the US, and yet, when it comes to the chinese economy, all you can do is point at the US and claim why everything is all fucked up.
sorry, but the very basis of how the chinese economy works is not in any way related to that of the us.
but Cramer said stawks will rally if China will just "shut up"... lol
America isn't going to be worried about the Chinese collapse since we'll be quite busy dealing with our own. Everything and everybody has been so bent up and manipulated that nobody knows what is real anymore, but reality always has the final say.....
In EBT We Trust
Accepted at strip clubs and casino's everywhere......
I love how its only China and not the rest of the world, as if us in the west have a different system.
You misread. Stockman didn't say the US has no fleas. He's pointing out the sheer magnitude of the ponzi that is China; it dwarfs by many multiples all ponzis currently underway in the West.
Understand now ?
Oh I understand, and it's bullshit. They build cities, we send our dumb kids to college. What's the difference.
Our credit goes into twitter, linkedin, shake shack, facebook. How the fuck is any of that real investment?
It's exactly the same. Maybe there's is growing faster but it's not a ride we haven't been on before and we're all crashing this time.
China has four times the population and not even double the problem - China learnt it's money printing skills off the US - US is the NEW Zimbabwe !
The US and its ponzi debt of $210 trillion in 2014, up from $60 trillion in 2003 will finish off what's left standing after the China crash
Kotlikoff goes on to illustrate that the fiscal gap is increasing at an alarming rate and that delay makes our problem much worse. In 2003, just a little more than a decade ago, the fiscal gap was $60 trillion. But by last year it had catapulted to $210 trillion. The fiscal gap may not continue increasing as rapidly as it has over the past decade, but with each passing year - as Congress and the President do their best to avoid action - our hole grows deeper by substantial amounts.
Under the CBO estimates used by Congress, we have a huge debt hole. Under the more comprehensive fiscal gap measurement, we have a chasm. But little if any Congressional action is planned to deal with the notorious level of debt. We're headed toward a fiscal black hole.
http://www.brookings.edu/research/opinions/2015/04/08-federal-debt-worse...
Yes the US will never afford its promised liabilities, however, the future hole that is Medicare/Medicaid/SS can and will be legislated away. That 210T number assumes the US will honor its promises to the elderly, the poor, and veterans. They will not.
The slow inexorable churning down the drain...
And the US is immune to ponzi schemes?
LOLOL...........
Good one.
No one is saying that. But if you had to pick where the big global ponzi collapse starts has started it would be China. And whereas our implosion will be a slow fizz, China will be a fuel-air bomb.
They have zero systems to handle this going out. At least the US has cases of lipstick for this pig, CNBC and Yellen.
And Chinese don't watch CNBC and don't know who the fuck is Yellen (sounds like a plastic leaf in Chinese)
Why is it so difficult for a retard, like yourself, to understand?
China is a communist state.
The government is the economy and the market.
You're a retatd because you don't understand.
They lie about everything.
Like the US.
Young retarded fool.
Eventually, the laws of physics and Nature will re-assert themselves. At that point the size and quality of your tribe sure as hell will matter.
Hedge accordingly.
I never thought that I would be planning to bring the tribe in when the conflagration starts. But that's what we are doing.
Amazing times.
Who needs all that? Bear Grylls told me that if I get thirsty just drink my own piss.
They can TELL you anything, but you obviously believed it, good luck w/ that and your quest for life extension.
US only existed for like 100 years and he's seeing the utter of collapse of Chinese civilization just because they stopped playing with the temporary rule of greenback.
Just to remind you, Chinese would do everything in the Chinese way, the good or the bad. It won't go along how Americans and their allies said and predict as. Stop inserting Americanism over every topic about China.
When this ignites the Chinese will only react.
Are we talking about China or the US?
Short RMB
Short Yuan
Long Shorts!
(Yaundies to you)
ahem
"the 1979-1980 silver and gold bubbles" were more of a return to actual value....for gold anyway (leave the Hunts out of the argument for now). If Volker had not raised interest rates and just let nature take it's course we would have much higher (un'regulated') gold prices now. This wasn't a bubble driven by excess currency production. It was gold finding it's true ratio to currency.
In China, China's ponzi is China's problem.
In the American country, Zion's ponzi is our problem.
Liberty is a demand. Tyranny is submission.
"In China, China's ponzi is China's problem.
In the American country, Zion's ponzi is our problem.
Liberty is a demand. Tyranny is submission."
You are incorrectly assuming that the Tribe isn't active in China's ponzi.
They may or may not, but they certainly are not to the degree they are in the DC US specifically, and the west generally.
Liberty is a demand. Tyranny is submission..
Zion is the "club" Carlin was talking about.
OK. They don't use "THEM". which only means that lacking millenia of experience and the smarts THEY have in abundance the rulers of China will be doing something stupider.
!950 to 2020. About 70 years. The typical run for a Communist Power. See R, USS.
Yep. No matter how many moneys the Fed prints, it can't cure the systemic misallocations of resources that define China's centrally planned economy.
Stockman, you're such a naysayer - all doom and gloom. Why muddy the waters with facts? You make no sense. You need to jump aboard the Awesomeship - everything is wonderful on this side.
Delusional - Are you aware of that ??
Sarcasm. Are you aware of that?
Since 1990's days of the Tank Man, so many self-proclaimed people have never stopped talking about the end of China as we know it. History is the unforgiving bitch if you ask me.
just watched the 60 min clip.... Wow.
Lets displace people - to build buildings - where no one lives
SHORT STEEL.
The Chinese fully understand that as long as you can trade pieces of paper having no intrinsic value for steel, cement, etc., and gold bullion, it is benefiical for you to do so. Whenever the knuckleheads overseas start hesitating a little bit, devalue the yuan to kick-start the process. Wash, rinse, repeat for as long as you can get away with it.
When people will no longer accept your worthless pieces of paper for gold, goods, and services, that's perfectly OK. It was a splendid era, with billions of your citizens lifted from medieval subsistence farming into the 21st Century, but all good things must come to pass, and there comes a time when useful idiots no longer hold any utility for you.
They will have to start dumping their hoard of U.S. Treasuries, because they would become worthless when China defaults on its total debt. They will trade them for gold while they still can.
Is there any nation in the world more capable of simply declaring jubilee and defaulting on all yuan-denoninated debt? There would be no need to sort out liens to personal or real property. Just remind all of your citizens that it all belonged to the state from day one despite the capitalistic veneer, and shoot anybody who disagrees with the idea that the Communist Party owns everthing in the country and always has owned it. Send bills for the bullets used to the families of those executed by the state.
You can then start buying whatever imported goods and services you might need with gold, or more likely, a new currency backed by gold in a world awash with increasingly devalued fiat.
You might lose some assets situated on foreign soil, but other than that, what will your foreign creditors do, send their land armies into the heart of asia?
That is undoubtably a bit overly simplistic, but IMHO that is what is going on right before our eyes.
absolutely
How do you say that in Murican?
Pity the poor Chinese Bankers who really are trying to dump their hoard of US treasuries every year. But every year importers around the world keep buying moar and moar Chinese stuff for dollars faster than the bankers can dump the hoard.
I suppose WalMart could stop buying cheap Chinese exports, but what would they do then? Fill their shelfs with Rolex and Breitling watches? And knick knacks from Cartier? And cheap tchotchkes from the Holy Land?
this is no time for your loyalty to Wall Street
They were wise enought to give individual corporations the right to suspend trading in their own stock. While the Wall Street firms that joined the Shanghai Stock Market apparently belived the rules of the NYSE were universal. And because Americans had always used them they were inviolable.
Ha hah.
So the 100s of billions they brought and borrowed to and in China are locked in until further notice. They thought it was going be Tokyo 1989.
But turned out to be Shanghai 2015. A new paradigm.
Meanwhile the PBOC is depreciating the yuan and every depreciation means less money for Wall Street to get back when they sell their yuans to leave with their tail between their legs.
And it cuts into the bonus of Lloyd Blankfein.
And that is outrageous..
Please stop using the word Ponzi. Everyone uses it to mean excessive speculation, or financial excess, which is completely wrong. A Ponzi cannot involve an investment in an underlying asset. Reckless speculation and overinvestment bubbles are not Ponzi schemes. Stop using that word.
ponzi
iznop
mark your calendars as history will mark this as the Beijinging,
er begining of the Qe Dynasty,
and they will build a great paper wall.....
The logic of the article is total BS: Chinese economy will collapse because its growth in the past 25 years was unprecended in human history. It's like saying that you will drop dead at any moment because your were exceptionally healthy for the past 25 years. The argument is really stupid.
You mean New York in Shanghai is not New York Shangrila?
So what happens to Hong Kong real estate. What happens to London RE and to Dubai RE, if the Shanghai bubble goes pop?
Do we have a tsunami like the one in 2004? Only this time its in an ocean of fiat?
Whew...back to the ox and cart! The camel caravans and from time to time we'll see a solar powered drone whistle by like a cuckoo clock that chimes.
Life will be minimalist and we'll all be learning Alphabet on Net via solar powered batteries fed on cow dung back up power provided by hoo flung dung Inc. !
The green will feed the yellow. Al Gore will be President and Trump will have had his hair cut in a Trump casino where nobody comes except the barber. As for Cheney he will sing : our way of life is non negotiable in Sing Sing.
Oil will stay underground and there will be satelites that run on unicorn beams.
Stockman will be elected Homer of the great reformation of capital's deformation.
Over time Climate change will recede and the Antarctic will be thick of sheet ice made by Putin's Ice palace, the new place for the KGB mob exiled to south pole.
The Arctic will be no longer the best place for nudist summer camps to look at eternal day as the polar bears will be back, and hungry for naked butts.
If you want to swipe a fuck buddy on Tinder you'll have to go to Greece as the cheapest place for a good lay in the blue bay.
OZone will not be a hole but gruyere will still be holy cow!
Life will still be worth living as there will be no shortage of steak tartare made from prime beef that never farts and is raised on plankton from ocean's floor, the next wonder of world wide Uncle Nemo's underwater sea farm.
Every age invents a new rage on a clean page until it gets made dirty by a greed is good denier.
Long live the free market of lazy click and play slobs, as long as they play with their own money; not ours.
Human nature never changes so let the bulls gore the bears and vice versa.
And, in the meantime Open Sing Sing to the Banksters of the world unite and HFT crowd pronto!
Some overcrowded place that will be. Madoff feels lonely!
An old chinese proverb: Bai wen bu ru yi jian. (One hundred things heard isn't worth one seen).
Everybody's a China hand now.
If the uber-industrious Chinese people can ever rid themselves of their authoritarian elites - watch out. Until then, not so much.
Sound familiar?
One of the main differences bewteen China and the US is that in the US, the overlords have pretty much mastered the way in which they control their people. Over the last 200 years our so, the West's so called "leaders" have fine tuned their oppressive tactics.
Not so much for Chinese leadership. Chinese leaders are not as sophisticated as ours when it comes to screwing their people. Although China has a long and rich history, todays leadership is very different than the dynaties of the past. Old Chinese rulers used brute force to control their populace, as did all other nations. Thanks wholly to our (US) banker controlled leaders, today all people feel as if they are truly free, without realizing that they have never been more enslaved!
So, just give Chinese leaders some time and they will learn very quickly how to really screw their own people. Given their relatively short time to expand and develop so quickly, I would say that they are on the right track and that they are, in fact, doing very well emulating their criminal cousins in the west.
Today's reference rate follow-up was subtle yet meaningful, nobody will likely lose face and most importantly there were no casualties. I barely follow currencies any more but even I knew the points that Foss, McMaken and Hollenbeck made in the rate post.
In the "current global monetary race to the bottom", or monetary musical chairs as I called it the other day, there won't be a last country standing. Once a big enough economy goes they all go down with it. And every major player knows this and that's why most are positioning hedges against it for that anticipated outcome. Some more successfully than others. Unfortunately nobody appears to be working together to implement a global financial solution in advance of a collapse to prevent it.
This is playing right into the hands of those that want to promote financial failure of the current system, foment international violence and incite open hostilities. These same individuals will be glad to pick up the pieces and offer some brilliant new preplanned solution. They will gladly do so at the expense of many more innocent lives in every country if they are allowed to proceed. And so the whole global ponzi in almost every country continues for now. This will not last much longer. So prompt action is required.
Here is a Chinese proverb that will apply equally to every country if this current global financial path and outcome are allowed to be continue. If you are patient in one moment of anger you will escape a hundred days of sorrow. Patience in the face of violence doesn't mean inaction. On the contrary, it means to redirect that anger and take every peaceful action possible to counter the current global financial outcome. For some it may be as simple as finally making the decision to contribute to stopping that financial disaster. Everyone will see what happened in Tianjin happen to them in their own respective country on the current financial course. Is that what each of you want?
China evolved its economy on the western teat and it was never real.
For the west to consume like it has these past 40 years, the over consumption era of the west central banks would need to start canceling debt allowing consumption to take off again.
It was a one trick debt pony unless debts starts getting cancelled and China now needing to bolster its economy resorts to raping its population economically using fiat also. If China deflates its economy being the biggest now can you see how every other economy fly upwards into the stratosphere on cost in relative terms. Then to go full circle the west will have to print also and this leads to ...
Taking it in terms to fucking print does not work just creates massive ebbs and flows what is needed is all central banks at a table agreeing to each print a similar % quota of fiat and lets save all the bullshit of economies working.
The world through free trade all became Keynsian or if not soon will be.
FAIT rules okay now where is MY PRINTING PRESS to print my own money.
China evolved its economy on the western teat and it was never real.
Rubbish. It exists thats what counts. Let me be clear. There is no democracy. Its economic war between groups. It will go to a shooting war once states start to fail.
wrg
I guess it is just a matter of semantics and definition.
Clearly, Dave, you don't believe a Ponzi scheme can be called a Ponzi scheme until its is exposed and Bernie Madoff goes to prison.
But Einstein's 'objective observer' would have no difficulty identifying a Ponzi scheme that a black hole would have trouble swallowing. I refer to the stock markets of the United States of America.
You prolly got a few bucks in. (wink wink)
I refer to the stock markets of the United States of America.
Agree. So China played catchup. So what? The Planets a ponzi scheme. Dont you get that author?
So China played catchup.
you think?
If they were playing 'get even' do you think they'd tell us?
We had no control about being born on this planet.
But we did have a choice about cheating small investors who want to make some money for tuition to send their children to college.
Yes life can be tough. But China has caught up.
Well, your 'caught up' and my "getting even" are not mutally exclusive.
Red Pill Bitchez!
I do not think the situation is as cut-and-dry as the author makes it out to be. I am expecting a big surprise from China in the future. Those ghost cities weren't built for nothing. You may be living in one of them one day.
This is a good time to be a contrarian, especially in these challenging times when nothing is as it seems. It might be a good idea to actually buy the Yuan. Yes, I said it.
China's first bubble was their population boom encouraged by honorary Bonesman chairman Mao. All bubbles thereafter were to employ their overpopulated controlled masses.
The Black Nobility that installed Mao promoted an overpopulated communist world because they were the easiest to control using a fascist centrally planned government.
Few in the West understand that communism, Islam, KKK and Mormonism were all Black Nobility creations to manipulate and maximize their control over the world.