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Big Outflow Trouble In Not So Little China?
China has two problems... well more than two we are sure, but these seem critical.
First, there is a significantly slowing economy that 'desperately' needs the hand-of-god Central-Banker to stimulate it with free-money - but is hand-cuffed by the huge disconnect between 'apparently' low CPI and extreme highs in food and energy prices which will only exaggerate spending retrenchment should any money-printing be enabled.
and with Corn stocks at a stunningly low level (lowest since 1995 and nearing 1975 levels) things are only going to get worse...
Which leaves the PBOC somewhat powerless to do the kind of massive stimulus hole-digging-and-re-filling that is required to plug the economic demand slack.
Second, it seems for many investors the writing is on the wall as money is flowing out of the world's growth engine faster than oil from a wok. While at the surface USDCNY appears to be doing its 'stable' thing - the PBOC is soaking up unprecedented amounts of CNY as the market 'sells' out.
This chart (that we previously discussed in detail here) shows the difference between market-driven movements in USDCNY (red) and PBOC-driven (blue) - clearly the market is selling its CNY and running away and while we are sure China would like a lower Yuan (to help exports etc.) it is nevertheless band-ridden and needs to maintain some stability or trade-wars or worse will escalate - so the PBOC is soaking up massive amounts of Yuan (and selling out its USD?) to maintain that illusion of control...
These 'adjustments' which are now on an unprecedented scale started right after LTRO2 ended and are accelerating...
which is leading to forward-Yuan trading at post-crisis high discounts...
This combination of slowing (and seemingly unstoppable) economic trajectory with significant negative money-flows is a vicious circle - evidenced by the efforts of the PBOC with stealth reverse repos and the 'easing' of their Yuan trading bands (chart below - as per Bloomberg's Chart of the Day) as perhaps they revert back to a weaker Yuan policy (and implicit strong USD mercantilist vendor-financing model).
Charts: Bloomberg and Diapason Commodities
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wtf?
people are cashing in their CNY and the PBOC is somewhat forced to buy them if they want to maintain their currency peg. They might let the currecy slide a bit in the future though. Hope that was helpful.
racism in germ-any flares up again:
http://www.thelocal.de/national/20120825-44569.html
Fascist police force in France is cleared of any wrongdoing:
http://www.thelocal.fr/page/view/amiens-police-cleared-of-provoking-riots
While Sweden plunges into full blown depression, the elite purchases fighter jets to be used agains it's own civilian population when TSHTF:
http://www.thelocal.se/42822/20120825/
When TSHTF....."Party leaders".....will send the surviving sheeple to the gulag for mass "re-education".
Drones are pretty easy to make if the people need to fight back. I think Tesla was making them somewhere around the beginning of the 20th century. The other day I saw some kids practicing dropping a small bag of dog shit from the sky over a field nearby.
Ahmeexnal:
My comments:
Over the past 30 years, Sweden has drastically shrunk its defence budget in terms of share of GDP. The Swedish defence industry, now to a large extent foreign owned, has also shrunk. My assessment is that the order for new JAS Gripen aircraft is a concession to big business in Sweden and people that still hold Saab stock [Saab AB (publ) shouldn´t be mixed up with the auto company Saab]. The current center-right government has so far not favoured domestic high tech industries and domestic big business. Instead, they have imposed tax breaks for cleaning peoples homes and fast food restaurants. New tax regulations will also in practice raise taxes for some venture capitalists and parts of big business since it will be harder to elude Swedish tax regulations. At the same time taxes will be lower for small and mid-size cleaning firms without offshore parent companies and owner operated fast food restaurants.
Furthermore, I think that there is a very small risk that Swedish armed forces will be used against the people. The Swedes generally think they have acceptable governments. Even when they make terrible mistakes like when they pegged the krona to the former EU currency Ecu and defended the exchange rate with a 500 % interest rate people thought they had politicians they could accept. The politicians blamed “the market” and the electorate bought that. On the other hand I prefer the former conscript army to the current system with regular soldiers from a democracy point of view (although I tried to get an exemption warrant and later applied for not having to participate in compulsory military refresher courses and also got the poorest grades on my platoon, 10-6-6). I think that the best solution from a democracy point of view would have been a very short but compulsory military service. My impression is that the reason why they scrapped the conscript army is that a very significant share of the young men in Sweden nowadays are Muslims and in some cases sympathize with radical Islam. They don´t want to give such people military training and let them know where they can steal, let´s say, a Robot 70 surface-to-air missile. But I don´t think that people in the Establishment are willing to admit that.
I am not sure that the Swedish economy is in a true recession yet. Unemployment has risen somewhat, but that´s rather because of excessive supply of labour than reduced aggregate demand in the economy. But it might get worse if the Swedish krona continues to appreciate.
(As regards China, which the article above is about, I suspect that the outflow of money is partially due to fear among investors that China´s new leaders will impose a more socialist policy than their predecessors. They can´t know for sure before they have seen the result of the change of leadership due this autumn.)
"I think that there is a very small risk that Swedish armed forces will be used against the people. The Swedes generally think they have acceptable governments."
The second statement is totally irrelevant to the first.
How do you say "Timmmberrrrr" in swedish...?
http://www.swedishtrade.se/PageFiles/134236/Export%20Managers%20Index%20...
Edit: cue a pop of their housing bubble.
Thx.
"TIMBÅÅÅÅR'"
Didn't the Greeks buy a bunch of armamants during their financial collapse? is this for Martial Law?
This is insane if countries are doing this while whole familes starve or are deprived medications. INSANITY!
if i recall correctly it was something like 40-50 M1A2 Abrahms tanks from none other than uncle sam
The political reliability of Muslim conscripts seems plausible as an issue; the other issue is that a greater share of jobs require long training courses: it's wasteful to send a conscript on an 18-month training course if his term of service is up six months later.
As in - let the Yuan apprieciate a little.
Post fixed, agricultural price problem fixed. China fixed.
oh wait....... china prints yuan, buys dollars, fixes currency rate. there. china fixed.
The Yuan will be gold backed
The USD will be tungsten backed
Seriously now, do you honestly believe there is enough tungsten in this world to have a tungsten backed dollar?
I am not having a go at you. I am simply saying that is unlikely that there is enough of anything with which to back the US Dollar except BS.
Depends how much tungsten is stashed at Fort Knox.
http://gold-quote.net/en/articles/fake-tungsten-gold-bars.php
BS applied evenly and in the correct quantities is actually quite useful and valuable in agriculture. Sadly there isn't enough of BS to back the enormous amount of dollars that will have to be printed.
With the quantities being spread around of late we are seriously in danger of osmotic burn out. The system can only tolerate so much.
Tungsten is used to make bullets and penetrating warheads. That is how Uncle Sam will back its dollar with tungsten.
"Tungsten is used to make bullets and penetrating warheads."
and sizing dies
Better Tungsten than nothing.
full faith & credit of digital "1"'s & "0"'s...
Sure ~ I'll hand over my gold & oil for that... [rolls eyes]... I'd prefer 2 have some REAL jooelrey... Thank u just the same...
You can use tungsten for light bulbs. Gold is worthless.
So the race to the bottom -- where the Western oligarchs gradually convince the population that they just need to accept lower wages, more pollution, and greater wealth disparity in order to "compete" with countries like China -- is taking another leg down.
Yes, western oligarchs have gradually convinced the sheeple that they need to adopt socialism.
Individualism - bad.
Collectivism -good.
The message to the individualist who yearns for freedom and liberty is clear: YOU DO NOT EXIST. ONLY THE PARTY (AND BANKSTERS) EXISTS.
Facsism is what the oligarchs have been selling. Many sheep mistakenly call it socialism, and they develop a knee jerk reaction against anything that involves collective action by the people. The oligarchs love that, because if the people are convinced that they must act individually or not at all, the oligarchs hold all of the cards.
You're getting less funny. Socialism is a category and a type within that category, it is for all intents and purposes, outside the Marxist debate club, interchangeable with collectivism and communitarianism. As a category it includes fascism, Maoism, Leninism, Marxism, Stalinin, national socialism, Juche, and about 100 other "different" varieties.
"Anything that involves collective action by the people" is collectivism and uses the - to call a spade a spade - bullshit term "the people". The people is an abstract collective noun referring to a thing which is itself incapable of doing any-thing because it does meaningfully exist in the real world.
"if the people are convinced that they must act individually or not at all" is pure specious equivocation. By definition a market involves interaction between persons, they are acting individually together.
This is grade school material, you must have been absent that day. My knee-jerk reaction to your endless collectivist yearning/whining is: grow up, your arguments have more holes than the innocent bystanders at the Empire State Building.
And LTEM is hereby officially bitchslapped!
If you mean that some bitch just vomited a bunch of meaningless drivel in support of an insanely myopic ideology in response to my post that correctly distinguishes fascism from socialism, you are correct akak.
Right. The oligarchs love it when you universally condemn any attempt by individuals to act together against their interests. They thank you for your support.
It sure looked like you got bitchslapped!
Shhh shhhh all is ok...just keep saying that...
Symmetry
Age old question of where to store your wealth....GOLD!
and silver ... and physical in your possession :)
... which is indeed where the Chinese gov't encourages the citizens to put their pension savings.
I am hearing lots of antedotal stories of Chinese taking holiday outside of their county... namely, Germany and Thailand. Perhaps other locations as well. Yes, there is lead time to holiday planning, but I am still left wondering how the breadwinners, when faced with such a drop in exports, can justify pleasure trips, especially considering the Chinese mindset.
As an aside, from my own observations last spring, Japanese tour groups in and around Germany have done a cliff drop. That has not changed since last spring, from what I am hearing on that circuit. But Koreans are still well represented.
Maybe they aren't returning to China. Maybe they are getting out while they can.
No. They are buying up everyting in sight.
Most euro-peons have a slave mindset dating back to medieval times: paying rent, paying high taxes, bowing to kings and queens, being OBEDIENT AND NEVER QUESTIONING AUTHORITY.
Saw Bergman's "Das Schlangenei" recently. The german commissar pretty much summarizes what happened to the sheeple during Weimar hyperinflation: they just kept being good obedient citizens doing their everyday routines as much as possible while the world around them burned. Those who saw the shitstorm coming and took measures to protect themselves (Jews, gypsies, free-thinkers) were later expelled/robbed/murdered.
I had a feeling you'd like bergman.
Those traveling Chinese are the tiny minority who work for 1. foriegn companies; or 2. RE developers; or 3. who work for the Gubbermint there.
Don't forget, more then 50% of people there live on less the $1 per day according to BBC (and that is probably optimistic). That 2008 "stimulus" they injected into their markets seriously distorted their economy similar to here except their injection was 3x bigger when compared to their GDP.
Their Housing Bubble is much greater then USA's relative to incomes. Market correction inevitable:
China Confronts Mounting Piles of Unsold Goodshttp://www.nytimes.com/2012/08/24/business/global/chinas-economy-besiege...
..and this...
http://www.nytimes.com/2012/08/24/business/global/manufacturing-in-china...
I have Chinese relatives (by marriage) in the extended family. They somehow are able to take long vacations all over the world, including the US, but they are incredibly frugal - they waste nothing, eat cheaply, don't own a car, and seem to buy only the bare essentials. There's an old rumor that the government pays certain (party-affiliated) citizens to travel, who knows.
I'm more amazed that so many Americans are still traveling - with whose money???
ahhhh. I've got it. We'll keep digging our financial hole until we hit China..... shit; this stuff is easy...
<----- gave myself a mark down
just change it to an up vote.
It's meaningless for China to stock up dollar when the coming bond bubble will explode within 2 years, plus it's not that China has a problem in export. It's literally every top end market in the world is too broke to buy anything. So you either use that dollar to buy up overseas assets like crazy and gold, or you could sit there and waiting for the FED to unfold another QE which will flood a wave of hyperinflation to your country.
Dollar index is going to be useless soon and only Gold will be the king
I totally agree with you in regard to crashing aggregate demand. However I must disagree with you on USD devaluation and bond market collapse. The FED is totally out of bullets and knows it must preserve its only asset, dollars. More debt does not solve a debt crisis, only default does and that's good for the dollar.
Don't worry the Party has ordered to build more roads and bridges to empty cities in the desert as the newly-built ones are collapsing one after another non-stop. China is indeed fucking DIFFERENT.
http://tinyurl.com/8ggddfo
Its not a housing bottom but a financial panic that is driving up US home sales.
Big outflows never a problem in not-so-little China.
Big roadside excretory outflows are part and package of Chinese Citizenism.
When house prices correct down to normal (that's about 14 medium sized corn cobs per sq foot), I may buy one for my son.
We no report GDP not like Econ’merika
Yea thats the ticket Atomizer, post on the correct thread and don't get thrown off by the fat China MAN photo relating to EU crisis.
Well if the dumb "shits" in the Chinese Government had let the YUAN float on the world's currency markets,may be some of the problems facing the Chinese wouldn't be so bad.
By not letting the YUAN float,the Chinese has cause unwelcome distortions in thw world's economcies that are coming back to bite them in the ass.
You would think that the Chinese understand Yin & Yang and the balance they require...
Fuck China and fuck the American politicians and bankers who pumped the EM's on the backs of American manufacturers. China will fall into a multi decade recession and manufacturing will return to the US. My problem is what to do with those parasites who try and sell us the "free trade" bullshit every two decades.
Prediction: Don't expect to hear much more Global Warming nonsense now that the EM's are collapsing.
I agree 100%--but I know what to do with them--bang bang
Communists.
I'll tell you what there is an outflow of... highly contaminated radioactive cars from Fukushima that are being sold in unsuspecting third world countries. http://falloutphilippines.blogspot.com/
now there is a good use for a drone. dorpping dog poop on politicians, senators and legislators. Since they all produce so much BS recycling the shit might be a good idea especially since their BS is not even fit for a dog.
Money flowing out of China into Southern California is huge. It is turning our real estate market. Small REITs 6million plus buying huge inventories of homes.
Adding premium to Socal's market, I have never seen so many foreign controlled investments in real estate before. Met one guy who is buying 20-25 homes a week in Riverside county, Los angeles county and he was joking how his friends from Singapore are the only ones that can bid against him.
50,000 Chinese a year are expected to move in to SoCal under immigrant status. That is they have 6 million plus in investments (15 homes).
Life style in China can be great, but you can't trust the Food, and Medical Care. Wealthy Chinese are getting their dollars out of China and displacing the Southern California Middle class (who are all moving to Nevada or New Mexico)
Met Pete Navarro last week in LA, (his movie "Death by China" just came out) and he had a plethora of information about Chinese money inflow to real estate, small business investment and China's elite.
Most of my Expat friends in China have moved their families out because of the polution and the flash violence.