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China Insolvency Wave Begins As Nation's Biggest Provincial Borrowers "Defer" Loan Payments

Tyler Durden's picture


Remember, back in the day, when a bankruptcy was simply called a bankruptcy? Naturally, this was well before ISDA came on the scene and footnoted the living feces out of everything by claiming that a bankruptcy is never a bankruptcy, as long as the creditors agree to 99.999% losses at gunpoint, with electrodes strapped to their testicles, submerged in a tank full of rabid piranhas, it they just sign a piece of paper (preferably in their own blood) saying the vaseline-free gang abuse was consensual. Well, now we learn that as the global insolvency wave finally moves to China, a bankruptcy is now called something even less scary: "deferred loan payments" (and also explains why suddenly Japan is going to have to bail China out and buy its bonds, because somehow when China fails, it is the turn of the country that started the whole deflationary collapse to step to the plate). After all, who in their right mind would want to scare the public that the entire world is now broke. Certainly not SWIFT. And certainly not that paragon of 8%+ annual growth, where no matter how many layers of lipstick are applied, the piggyness of it all is shining through ever more acutely. Because here are the facts, from China Daily, and they speaks for themselves: "China's biggest provincial borrowers are deferring payment on their loans just two months after the country's regulator said some local government companies would be allowed to do so....Hunan Provincial Expressway Construction Group is delaying payment on 3.11 billion yuan in interest, documents governing the securities show this month. Guangdong Provincial Communications Group Co, the second-largest debtor, is following suit. So are two others among the biggest 11 debtors, for a total of 30.16 billion yuan, according to bond prospectuses from 55 local authorities that have raised money in capital markets since the beginning of November." So not even two months in and companies are already becoming serial defaulters, pardon, "loan payment deferrers?" And China is supposed to bail out the world? Ironically, in a world in which can kicking is now an art form, China will show everyone just how it is done, by effectively upturning the capital structure and saying that paying interest is, well, optional. In the immortal words of the comrade from Georgia, "no coupon, no problem."

Our advice: go long Teva, which recently acquired Cephalon, and its wonderful drug Provigil, which is basically legalized cocaine, speed, meth and heroin all in one perfectly legal pill, as the newsflow, up until now only picking up with the idiot headlines out of Europe at 3 am Eastern is about to become one constant 24/7 flashing red rumor/disinformation mill. Also, next time someone wants to make THE drug cocktail of choice for the headline reacting speed trading junkie, please name it appropriately. Jeffrey will suffice.

More on China's piglipsticking:

As local governments delay payments for projects commissioned as part of the stimulus to ward off recession in 2009, less money is available for bank lending even as China is taking steps to inject more into the economy. The central bank has held interest rates at 6.56 percent since July to boost the economy, while the US Federal Reserve and the Bank of Japan have kept benchmark rates near zero since 2008.


"When companies start to roll over debt they're not retiring debt, and banks aren't retrieving their capital, so you're crowding out new lending," Patrick Chovanec, a professor at Tsinghua University in Beijing, said in a Dec 13 interview. "This is a problem that's going to start to bite next year."


Local governments had 10.7 trillion yuan in debt at the end of last year, 79 percent due to banks, according to the country's first audit released in June. So-called local financing vehicles that meet collateral requirements can have a one-time extension on their loans, Zhou Mubing, vice-chairman of the China Banking Regulatory Commission, said at a conference on Oct 24 organized by the Internet portal, according to a transcript of his comments on the website.


Guangdong Provincial Communications Group, Hunan Provincial Expressway Construction Group, Gansu Provincial Highway Aviation Tourism Investment Group Co and Sichuan Railway Investment Group Co owe more than 200 billion yuan to banks, the data show. They plan to defer 34.4 billion yuan in interest payments, according to their bond prospectuses.

Yes, that's a lot, and it's going to get much worse. But not if you listen to Beijing Bob: yes, even communist countries have a department of propaganda:

Lei Wanming, Gansu Highway's deputy Communist Party secretary, said the company's interest payment deferrals do not raise any concerns. "Our company can pay our interest and our principal payments with no problem," he said in a Dec 5 interview. "You can't just consider this issue by looking at a bond prospectus."

Said otherwise, all is good, and China's 'relatively fast' growth is still on the agenda:

National leaders set a goal of "relatively fast" economic growth for 2012 at a major conference in Beijing that ended on Dec 14, according to the Xinhua News Agency. The global outlook "remains very grim", Xinhua cited the leaders as saying.

What is most ironic is that Meredith Whitney will be right... just wrong about the country.

The extra yield required to hold Hunan Provincial Expressway's 900 million yuan in 2012 bonds has increased to 308 basis points from 151 basis points on June 21, when they were issued. That compares with a current spread of 11 basis points on Shenzhen's five-year direct municipal bonds. 


Yields on local government financing company bonds will remain high next year as selling debt becomes a main channel for raising funds, China International Capital Corp analysts led by the fixed-income analyst Xu Xiaoqing wrote in a Dec 16 research note. Most of the bonds are sold at yields of 8 percent, or 144 basis points more than the benchmark bank lending rate, according to the report. Five-year top-rated corporate bonds yield 4.98 percent, according to Chinabond, the nation's bond clearing house.


"Although the China Banking Regulatory Commission has recently eased loan restrictions to help liquidity, recent supply has been increasing, causing the secondary market to pay attention to systemic risks," they wrote. "The credit quality of recent financing vehicle bonds continues to get weaker."

For those who refuse to swallow China's lies, there is one way around it:

Five-year credit-default swaps insuring against default on China's sovereign debt rose 3.2 basis points recently to 149.66 basis points, according to data provider CMA...

As more and more scratch their heads, the math is clearly not your friend:

Even after the reduction in interest payments, Gansu Provincial Highway said that interest and principal payments in 2011 will amount to 3.33 billion yuan, more than its 2010 cash flow of 3.04 billion yuan, according to bond-marketing materials.


"This prospectus is telling us that banks can expect to only receive roughly half of what would have been expected in interest payments," Charlene Chu, a Beijing-based banking analyst with Fitch Ratings, said of the Gansu disclosure.

And as for what happens when an entire continent is stuck fighting simple math and failing, we refer you all to the case study that is Europe.

So as we all prepare for what is set to be, without doubt, a relentless barrage of headlines, lies, innunedo, rumors, media counterrumors, more lies, propaganda, from Europe, the US and now Asia, here, again, is Jeffrey.


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Mon, 12/26/2011 - 01:18 | 2011252 SMG
SMG's picture

Cry 'Havoc,' and let slip the dogs of war....

Mon, 12/26/2011 - 01:47 | 2011291 knukles
knukles's picture

Or can just ring the doorbell and run.

Mon, 12/26/2011 - 01:50 | 2011298 Harlequin001
Harlequin001's picture

It's at times like this when you really appreciate holding physical metal, along with a goodly supply of tinned food....

Mon, 12/26/2011 - 01:54 | 2011304 Ahmeexnal
Ahmeexnal's picture

Ukraine dumps euro and dollar, embraces gold and silver:


Former Soviet republic of Ukraine is considering to mint more gold and silver coins and made it available for general public.

According to Ukraine’s National Bank, launching of investment coins made of gold and silver will allow people looking for an alternative to dollars and euros as a means of savings.

The coins can be bought by Ukraine’s local currency, hryvnia, through the branch network of the banks to be selected by the centralbank .

The volume of the first issue of the investment coins can make 4-5 thousand pieces. They will be issued in denominations of 1, 2, 5, 10 and 20 hryvnias with the weight ranging from 0.1 to one troy ounce of triple nine gold .

Also it is expected to release silver investment coins, weighing one and two troy ounces. In addition to the investment coins, the National Bank of Ukraine is also planning to issue gold securities – gold rate-indexed certificates.


Mon, 12/26/2011 - 01:57 | 2011309 Harlequin001
Harlequin001's picture

The US dollar is toast.

Mon, 12/26/2011 - 02:53 | 2011361 Real Money Wins
Real Money Wins's picture

This is just a prelude. They are only clearing their throats. You haven't seen any thing yet! From here the ride gets really wild. The next faze will be like base jumping off the Burg Khalifa in Dubai!

Mon, 12/26/2011 - 06:22 | 2011496 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

That sounds COOOOOOOOOOOOOOLLLLLLLLLLL!!!! mean with a bungee rope right??

Mon, 12/26/2011 - 08:25 | 2011544 Oh regional Indian
Oh regional Indian's picture

Wait till the Indian in-solvency wave begins. The whole game in the BRICS is a house of cards (or brics if you will), all tottering.

The demand is fake (pumped), th esupply chain is shaky (and this is true across all supply chains).

In fact, what becomes rapidly obvious if you pay attention, is that India/China were built up PURELY as low cost labour supply and easily led by the nose connedsumers.

If I did a post on Bangalore's growth in the last 15 years, the story would be a horror story of mangled implementation, curroption and a total lack of empathy for the humans involved.

BRIC wall is going down, even before the EURO I feel.




PS: That pig picture is chilling. Not just in a 1984 way neither in a lipstick on a pig way. Deeper.

Mon, 12/26/2011 - 08:50 | 2011557 Tao 4 the Show
Tao 4 the Show's picture

Know what you mean. I have connections in Brazil, and though the resource/growth story is true, there are loads of problems. Corruption probably tops the list, followed by societal breakdown (they have graduated from simple robberies to gunpoint robberies/murders of car drivers, etc), inflation, and many others. Not sure how the story will play out, but it is certainly no paradise.

Mon, 12/26/2011 - 11:09 | 2011707 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

ORI. How about a guest piece on Bangalore?

Mon, 12/26/2011 - 11:31 | 2011736 Oh regional Indian
Oh regional Indian's picture

I'd do it. In fact, I'd do a video piece, that will really tell a story, BRIC by BRIC.

Iinterestingly enough, I have 8mm film from 1972-1975 bangalore, silent film... just the contrast tells the story. 

Interesting, I'll pursue tha tline of thought. Thanks Yes we can.


Mon, 12/26/2011 - 23:41 | 2012645 OldPhart
OldPhart's picture

With you on the pig picture.  It has an uncanny resemblance to a lot of North Florida/South Alabama in-laws.

Tue, 12/27/2011 - 04:51 | 2012839 cleverlemming
cleverlemming's picture

I'd like to know more about your assertions about supply and demand. Apple has every machine in China that can make aluminum unibody notebook cases under contract. Demand is strong. Huge growth in road and rail construction. The only logistics problem I know about is that we have to ship huge numbers of empty containers back East. I don't see Bangalore as comparable except, perhaps, where deliverables are software and services but I look forward to learning more.

Mon, 12/26/2011 - 10:54 | 2011687 Winston Smith 2009
Winston Smith 2009's picture

"The US dollar is toast."

Eventually.  But there will be a fairly wide window of opportunity where it is king as everyone rushes to the safety of the (for now) best of the fiat currencies.  In that window, there'll be a chance to buy productive assets in dollars at greatly depressed prices, just as the smart money did during the Great Depression.

Mon, 12/26/2011 - 18:16 | 2012272 WhiteNight123129
WhiteNight123129's picture

Agreed, through of stock matket after real estate bust usually bottom after 12-18 months. You might have real bargains on the Hong Kong stock exchanege outside of banks and real estate related businesses.


Mon, 12/26/2011 - 02:05 | 2011318 Temporalist
Temporalist's picture

They better stop considering before they can't get any.

Mon, 12/26/2011 - 04:35 | 2011440 Right-on Left-off
Right-on Left-off's picture

Uh Oh!

This sure looks like real money from a sovereign going into circulation.

Mon, 12/26/2011 - 05:28 | 2011473 I got the Bull ...
I got the Bull by The Horns - HELP's picture

I am calling the top of the gold market.


Jews have always shafted the Ukrainians, and they have an inside joke of picking on them. I bet they sell them gold at the top of the market. I feel sorry for the non financial literate but honest and kind Ukrainians.


Thats why the ukrainian village idiots stomped them in WW2. Payback bitchez!


moral of the story. If you are a Jew, it is not funny to short change the village idiot. One day a competing army gives them, a uniform a gun and a sense of pride in themselves.

Mon, 12/26/2011 - 08:11 | 2011535 CoolClo
CoolClo's picture

@I got The Bull..


+100. When a government decides to get into an investment its time to do the opposite. Government is  the herd mentality in the fullest. 


The ongoing Deflationary Depression will hit PMs as they are sold to pay down debt, which is mostly denominated in Private Federal Reserve Notes.


The Great De-leveraging continues..



Mon, 12/26/2011 - 15:18 | 2012060 frostfan
frostfan's picture

only 13 anti-semite jew baiters today?   Where are the rest of you idiots?

Mon, 12/26/2011 - 14:37 | 2011989 e2thex
e2thex's picture

"Considering" was the operative word.

Next comes the ad in the WSJ announcing a LIMITED Printing.  You know the money back guarantee will be no problem, right? And they're gonna give you an affadavit attesting to the purity.

If you want an affadavit now with a new driver's license that will cost you an additional $29.99 or can you just give them your bank routing number...

Mon, 12/26/2011 - 01:51 | 2011301 wisefool
wisefool's picture

from you lips to anyone in state/defense if we dont have Ron Paul in 2012.

Mon, 12/26/2011 - 03:55 | 2011405 Hugh G Rection
Hugh G Rection's picture

The thread picture is confusing... what does Candy Crowley have to do with the story, and doesn't she have long hair?

Mon, 12/26/2011 - 04:14 | 2011427 Troll Magnet
Troll Magnet's picture

shut the fuck up HGR! you're insulting the pig!!!

Mon, 12/26/2011 - 04:17 | 2011430 Hugh G Rection
Hugh G Rection's picture

My apologies to the swine community.  My comment was lowbrow and way over the line.

There is no way Candy tastes half as good as bacon.

Mon, 12/26/2011 - 12:24 | 2011800 ucsbcanuck
ucsbcanuck's picture

"There is no way Candy tastes half as good as bacon." Yeewww...

Mon, 12/26/2011 - 10:02 | 2011637 fonzanoon
fonzanoon's picture

I thought between China and japan they owned trillions of treasuries. Why not sell some to help these companies that can't pay their loans?

Mon, 12/26/2011 - 11:16 | 2011719 Bindar Dundat
Bindar Dundat's picture

As ZH has been saying for two years -- the world is broke, there is not a Country who can bail us out and when the tidal wave of bankruptcy hits there will be no safe place to be but gold and barter.   It is going to be bad: currencies will be worthless and every nation and company in the world will be scrambling to stay afloat and our economies will dissolve into feudal states where barter is the only means of business and personal survival.  


Barter skills and  professional and trade  skills will be the key to living, but not all skills and products will be seen as equal in the coming changing world.  What good is barter if your product is software? What good is barter if you are a lawyer or an accountant?  What good is barter if  you have nothing to trade that will help  people survive?  QUESTION: Is it time to asses your skills and see if you will be a survivor in the coming crash or is it already to late?


I suppose if you are a Doctor a dentist, a farmer with land or make and sell supplies that people need to exist you will be OK.  But anything else and I am afraid you better learn how to kill and steel because you will be part of the massive group of citizens that are in deep trouble and when they do the population will become animals and it will be survival of the fittest.  


Any ideas of what we financial types should be getting into?

Mon, 12/26/2011 - 13:43 | 2011885 JimmyCDN
JimmyCDN's picture

I think you may be right.  Time to trade in my laptop for a good set of bicycle repair tools again.  I can't wait for the grime under my fingernails.

Mon, 12/26/2011 - 14:29 | 2011972 Hugh G Rection
Hugh G Rection's picture

Any ideas of what we financial types should be getting into?

Religion. They better get right with God. Managing a hedge fund may have made you a pile of fiat in ponzi times, but with no combat/survival skills you'll end up dog food in the new world disorder.

Mon, 12/26/2011 - 14:35 | 2011984 Elwood P Suggins
Elwood P Suggins's picture

Ah soooooooooo.  Have tickee but still no laundry.

Tue, 12/27/2011 - 00:21 | 2012688 Buck Johnson
Buck Johnson's picture

They are trying to do and say things that aren't supported by mathmatics.  They might as well get a bailout from a planet in Alpha Centauri star system.  Everyone is in denial and many are starting to believe the denials.

Mon, 12/26/2011 - 01:18 | 2011253 cherry picker
cherry picker's picture

I've been around awhile and have never witnessed so many governments at all levels so poorly run and indebted as in 2011.

A reflection of populations' desires and habits or the other way around?

What the unsuspecting do not know as they sit in front of their Christmas trees today is this system is going to stall and head down to earth rapidly.

There are no parachutes.....

Mon, 12/26/2011 - 01:48 | 2011293 Freddie
Freddie's picture

I've been around awhile and have never witnessed so many governments at all levels so poorly run and indebted as in 2011.

It's called socialism and politicians dear boy. Look it up.   They are not "poorly run" - they loot the system and taxpayers by design.

Mon, 12/26/2011 - 01:54 | 2011303 Harlequin001
Harlequin001's picture

I hope we all realise that we are living in the golden age of civilisation and that this is the very peak of human development.

Problem is that by definition, it's all downhill from here...

Merry Christmas everyone...

Mon, 12/26/2011 - 01:58 | 2011311 wisefool
wisefool's picture

I agree. if material wealth is the criterion.

But I a fascinated on a spirtual level about the world without the USA as supercop to the world. And I dont mean that in a bravadic sense, I mean it in a 50 vs. 750 military bases around the world way of doing things.

Mon, 12/26/2011 - 02:12 | 2011325 Harlequin001
Harlequin001's picture

Having the US as Supercop only takes the war elsewhere, so that will be very different going forward, but lets face it, most of us would not have been educated had it not been for the educational facilities made available by the State(s) various through fiat money, neither would our families be as safe, healthy and well fed had it not been for the medical and agricultural advances made available from research paid for by fiat money, and the investment made into these companies which is itself originated from fiat money. Whilst we all slag this system off we have all benefitted from it greatly.

The world is going to be a very different place very soon, and I for one am not too keen to see it happen. Let's face it, the next global policeman might not be a Western power. How does that sound?

Mon, 12/26/2011 - 02:19 | 2011331 Dasa Slooofoot
Dasa Slooofoot's picture

America has never been more fatter & dumber...

Mon, 12/26/2011 - 03:12 | 2011370 Dingleberry
Dingleberry's picture

or tattooed.....

Mon, 12/26/2011 - 03:25 | 2011379 dolph9
dolph9's picture

Americans have given up.  Not that I blame them.  Just look at the shit everywhere around you in this country.  When you swim in shit, eventually you just give up and drown in it.

Mon, 12/26/2011 - 04:03 | 2011418 Hugh G Rection
Hugh G Rection's picture

"Two mice, fell into a bucket of shit, one mouse quickly gave up and drown... the other mouse, struggled so much, he churned that shit into silver, and moved south to bang senoritas..."

Mon, 12/26/2011 - 04:20 | 2011431 Troll Magnet
Troll Magnet's picture

mmm...senoritas...mas mamasitas por favor?

Mon, 12/26/2011 - 08:07 | 2011537 spankfish
spankfish's picture

mucho Cerveza, Por Favor

Mon, 12/26/2011 - 11:33 | 2011735 Normalcy Bias
Normalcy Bias's picture

"I don't know what's gonna happen, man, but I wanna have my kicks before the whole shithouse goes up in flames. Alright!" - Morrison

Mon, 12/26/2011 - 13:49 | 2011921 Bobbyrib
Bobbyrib's picture

It will be great when the great collapse occurs and he is the only gringo within miles.

Mon, 12/26/2011 - 14:37 | 2011988 Hugh G Rection
Hugh G Rection's picture

Ohhh Bobby, worry about yourself, I'll be fine ;-)

"No no gringo, no dispare, por favor, lo siento, no quiero sus balas en mi culo!"

La flama blanca bitchez, you're fucking out!

Mon, 12/26/2011 - 08:47 | 2011560 CoyoteBlue
CoyoteBlue's picture

Oh God, the Shithawks are coming!

Mon, 12/26/2011 - 14:31 | 2011976 Hugh G Rection
Hugh G Rection's picture

Hillarious. Hadn't seen this movie yet, now I have something to do later. That Lahey character is a riot.

Mon, 12/26/2011 - 20:44 | 2012444 ucsbcanuck
ucsbcanuck's picture

The Trailer Park Boys - one of Canadian TV's greatest exports

Mon, 12/26/2011 - 20:57 | 2012466 Ganja Jane
Ganja Jane's picture

Yeah, I discovered them on Netflix. I saw Movie 2 first. Hilarious! I laughed so hard my stomache hurt for about 2 hours afterward.

Mon, 12/26/2011 - 02:26 | 2011339 wisefool
wisefool's picture

I thiink it would be okay. The advances you speak of in AG and ED would have happened, and perhaps better than with the USA being bad cop for the last 50 years

I just look at the leadership (puppets as required) in the west. The Clinton-Gor-Edwards types were typical slothful/lustful stooges. The Bush-Dole types were pshycophants for the chance to wear a scarf like "lorence" of arabia.

Obama, is far better than both types, but he is still a chicago-robot. Point is, with this type of interia, I actually welcome our chinese masters. Nobody from Euroland changes my assesment. (Blair, Trichet, Merkozi, etc)

Mon, 12/26/2011 - 02:50 | 2011359 Harlequin001
Harlequin001's picture

I don't think any Western country has had a decent political leader worth voting for in the last 50 years. When you look at elections today there is not one candidate as far as I can see advocating cuts in spending and balanced budgets. There will be many betterments, a collapse in government agencies will be the most important and the most beneficial, and personally I look forward to the day when investors feel real fear at these so called investment opportunities and managers, when capital is not in endless supply and when I can invest in a business safe in the knowledge that some other country can't simply magic new capital up from nowhere to build another similar business and undercut me.

I think the world will be better off with fewer motor cars and less available junk, and whilst I am inclined to agree that some the advances would have been made, I can't help but think they would have been fewer, and concentrated in areas of the greater importance. I do believe we will not see better times again in our lifetime, but this system is now over, and it's time to move back to value in money before we embark on the next great fiat experiment because as we all know, and our children will be told, it will be different next time....

Mon, 12/26/2011 - 03:04 | 2011366 wisefool
wisefool's picture

Right. My major gripe with the western way of doing things is that as you mentioned, we can have Benny bucks make AAPL the largest market cap in the world,

It was a double reverse tarrif they experimented in. But back the old days (hopium wars) they actually repatriated PMs from the east. This time we got deigned for obsolecence devices to play angry birds. And a global community that associates the USA with the military adventurism.

Mon, 12/26/2011 - 03:24 | 2011378 LowProfile
LowProfile's picture

Not ONE candidate?!

You must have been in your bunker since 2007.

Mon, 12/26/2011 - 03:30 | 2011386 wisefool
wisefool's picture
  1. The First Rule about Ron Paul is that you Don't talk about Ron Paul.
  2. The second rule about Ron Paul is that you Dont mention that Buddy Roemer is the VP for the 2012 repuiblican ticket.
  3. Rule #3. If anybody gets Romney drunk and gets him to release the last 30 years of taxes .... Tyler might give such a person image posting permissions.
Mon, 12/26/2011 - 04:01 | 2011411 Geruda
Geruda's picture

We are not knowing how yet but many many peoples will be dieing in ways we are having no knowing how yet but I am having the thinking that the way many peoples will be dieing that we are not knowing how yet will be caused by a terrible disease having very bad sickness and very much speed in how it is being spread.

Mon, 12/26/2011 - 06:48 | 2011506 Jendrzejczyk
Jendrzejczyk's picture

That is what many people with the reds in their necks are saying here too.

Mon, 12/26/2011 - 07:44 | 2011517 pine_marten
pine_marten's picture

Makes more sense than the FEMA camps. 

Mon, 12/26/2011 - 08:36 | 2011545 KickIce
KickIce's picture

Comparing politicians is like collecting piles of dog shit and trying to determine which smells the best.  (This same analogy works for currencies so give me credit for a 2-fer)

That be said, Obama is still writing his page in history - I'd wait to the end for a final judgement.

Mon, 12/26/2011 - 03:57 | 2011408 jonjon831983
jonjon831983's picture

Unfortunately, the grass is always greener on the otherside.  After hopping the fence we never really know what will happen until we have truly have time to take a breath.


I think there may not even be a replacement Team America World Police.

Mon, 12/26/2011 - 04:02 | 2011415 wisefool
wisefool's picture

I think we should just get an annulment. Meaning the $ cost of the last 40 year of american military adventurism is simply removed from the shoulders of the generation that has not been born yet. It will be the living americans' burden to carry the guilt for the war dead.

Mon, 12/26/2011 - 04:58 | 2011448 jonjon831983
jonjon831983's picture

If only eh?


Wouldn't that effectively be a timed default?


Potential problem: A sort of moral hazard.  If the debts will be cleared for the next generation, what's to keep the present generation from going all out.  Also, the present generation would be like f - this I'm not paying now.  Why didn't we get the same deal.

Secondary: define generation.  People are born every day and those born now will have already received the "benefits" - whatever they may be.  The generational line is sort of fuzzy.  Do we cancel debts for those born now this exact minute?  etc


3rd - what is the cut of for american military adventurism.  What part is included.  What is legitimate defensive military needs and what is for adventurism.  It gets really grey.


Well, in any case the thought would be nice.

Mon, 12/26/2011 - 05:10 | 2011457 wisefool
wisefool's picture

Right. I know it is a fantasy. From my american centric view the USAs force projection has benefitted Europe as much or more than the USA in maintaing franchises around the world.

So lets just wipe out any debt owed to europe and vica versa as a start, And the fed can go bankrupt. who would miss it?

Mon, 12/26/2011 - 05:29 | 2011475 jonjon831983
jonjon831983's picture

Quite.  I would think pretty much the modern world, not just Europe, has received a benefit from US dominance.  True some "unfortunate" places have been "put in their place", but the stability provided has allowed for everybody else to prosper and progress.  At least, avoided total war - or is it just putting a lid on a boiling pot?

China, Japan, and other major debt holders may miss the cancelled debt.  Thinking since debt can move around this could it include domestic debt holders, ie pensions (if they have any funds), banks, etc :)

Mon, 12/26/2011 - 03:53 | 2011402 jonjon831983
jonjon831983's picture

material wealth as a criterion - that's a good point.


I am not sure the spiritual level (if I understand what you mean by spiritual) is the right way to look at it.  I think we need to think on a physical security level.  We could be plunged into a new world of physical uncertainty.  It could become a free for all with virtually everything up for grabs and old agreements and alliances remade.

Just hope cooler heads and enough of an impetus for shared prosperity prevails.

Mon, 12/26/2011 - 04:06 | 2011420 wisefool
wisefool's picture

I posted above. I am willing to take a shot at not having the US being the "gun in the room" for geopolitics. Looking into libertarian philosophy even further out than Ron Paul. and the calculation that Oil is over $300/bbl if you factor in the MIL cost. Ron Paul says we could negotiate for it cheaper than that. And when I say we, I mean the world, not just the USA.

Mon, 12/26/2011 - 05:23 | 2011467 jonjon831983
jonjon831983's picture

Unfortunately, not familiar with specifics of libertarianism.

I was gonna write a whole essay, but it may be simpler to say that maybe on paper this is possible.

What I see, based on what is suggested above, is that this agreement is hinged entirely upon trust and cooperation, but there may be too many moving parts..  Pre-existing situations may put a wrench in it.  

example: historical cultural differences may not encourage cooperation/trust.  A country / government may not be willing to sacrifice the possibility of losing out on future supply.  A rich country may not be willing to "wait in line" for its share of the oil and may be willing to pay a higher price and help jack up prices for its own benefit.  And... from there a whole spiraling out of control or excess may occur.


Or am I being jaded and pessimistic. :)

Mon, 12/26/2011 - 19:37 | 2012373 ZHaddict
ZHaddict's picture

A country / government may not be willing to sacrifice the possibility of losing out on future supply.  A rich country may not be willing to "wait in line" for its share of the oil and may be willing to pay a higher price and help jack up prices for its own benefit.  And... from there a whole spiraling out of control or excess may occur.


How else would a line be determined other than by willingness to pay?  And a countries share?  Who gets to determine that?  Man, get educated on markets.  A price is simply the result of cooperating individuals agreeing to an exchange.

What you should be worried about is military action to steal oil and other resources from the people that produce it.

Mon, 12/26/2011 - 02:00 | 2011314 Freddie
Freddie's picture

I agree but I think we peaked around the late 1980s.

Mon, 12/26/2011 - 02:13 | 2011327 Harlequin001
Harlequin001's picture

I wouldn't disagree with that, but I don't think it will get any better than it has been in our lifetimes...

Mon, 12/26/2011 - 03:55 | 2011406 Geruda
Geruda's picture

I am having the belief that the peaking the US was having was happening when peoples were still being able to buy cars that were new and  GTO pontiacs were being the new cars they were buying.

Mon, 12/26/2011 - 08:14 | 2011540 spankfish
spankfish's picture

Yea the 80's... peak poontang.

Mon, 12/26/2011 - 08:28 | 2011547 KickIce
KickIce's picture

It would have to be pre gold standard, everything has been an illusion since.

Mon, 12/26/2011 - 13:06 | 2011857 Freddie
Freddie's picture

You are probably correct.  The late 1960s were probably the peak.  That MF'er LBJ wanted to get incredibly wealthier off of Vietnam. LBJ bankrupted everything with Vietnam and War on Poverty then Nixon goes off the gold standard, 

Mon, 12/26/2011 - 03:22 | 2011377 dolph9
dolph9's picture

The world will be a much worse place as the population bubble pops.  Famine, disease, war, and misery are coming.

Finally the population will stabilize at a much lower level, and there will be plenty of land and water and game for everyone, and the world can slowly become a better place again.

Mon, 12/26/2011 - 06:26 | 2011498 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

Does this mean I'll get laid even less?!?!?!?!

Mon, 12/26/2011 - 07:32 | 2011508 Element
Element's picture


I hope we all realise that we are living in the golden age of civilisation and that this is the very peak of human development.

Problem is that by definition, it's all downhill from here...


And how the teleprompter will be scripted;

And as the people of this greatest of nations knows, deep in their hearts and aklso gain endless courage via this fact, that it's always darkest before the dawn.

And I firmly believe this, Americka, this will be our greatest triumph, when we step up to show the entire financial world that the light will come, yes, it will come. There are many who dispair and have lost the audacity to hope, who feel we can't rise above this transient period of great debt. But history will show America, that the people DID rise above it <slaps lecturn>, and did generate the greatest era of human advancements and freedoms ever seen!  <holds fist high>

The future is truly ours America!

I believe in this, and I know this America!  

Y E S  W E  C A N! 

May peace alight on the world and bring bounty and prosperity, beyond imagination, and in ways that we can not even foresee.

God Bless America!


The crowd goes into a wild emotional delirium, that strangely lingers over the MSM and the whole globe, until about 9:38AM Tuesday, as four silkworm missiles hit a cruiseliner entering New York harbour.  At first they think it's just a maritime accident, then there's a strange underwater blast beside the ship, then 3 more missiles are clearly seen striking home only minutes after this. The globe is aghast! Almost all on board are killed, in front of a global audience of billions.  In the following hours unexploded sea mines are found in the three largest harbours on the US east coast. Then mustard gas bombs detonate inside two Washington schools, killing and burning scores of children and teachers. Within minutes of this a shaky coastguard video emerges from a White House briefing showing one of the suspected mines actually has handwriting on it, that appears to be an excerpt of an accusation by Mahmoud Ahmadinejad during his last speech to the UN General Assembly.

The Barry looks very cross and says shit like; "To those who wear the uniform, get ready".

And the King of Saudi Arabia says shit like; "Now we are all Sunnis".

The bewildered global crowd cheers and emanates great good-will and sympathy to the USA, and Wahhabi's in general.

And we're off to the races again!

Saved by the war.


Stranger things have happened.

Mon, 12/26/2011 - 07:43 | 2011516 Dugald
Dugald's picture

Ah, Doctor Stangelove...I wondered where you had got to...

Mon, 12/26/2011 - 08:52 | 2011563 Element
Element's picture

Are you some kind of prevert commie puke Mandrake?

Mon, 12/26/2011 - 03:35 | 2011390 Seer
Seer's picture

No, you fucking idiot, it's called "resource depletion."  It's fucking jokers like you who constantly drum stupid shit that keeps people from realizing the ACTUAL source of the problem.

It's GROWTH that's failing.

Mon, 12/26/2011 - 05:04 | 2011452 george1982
george1982's picture

yep every single 1 of us that holds fiat currency as our main asset is totally and utterly, completely (directly or indirectly) broke, merry xmas and a happy new year!!!! long live hyperinflation!

Mon, 12/26/2011 - 01:20 | 2011262 Temporalist
Temporalist's picture

The new Porcine line of Mary Kay products - Made in China.

Mon, 12/26/2011 - 01:21 | 2011265 El Gordo
El Gordo's picture

If all of China's accumulated trade surplus is represented by USD and related treasury issues, and if the USD is basically worthless, then what is China's real net worth?

Mon, 12/26/2011 - 02:00 | 2011313 wisefool
wisefool's picture

All the pasture and potatoe land they want to buy on tuesday. And they will.

Mon, 12/26/2011 - 03:25 | 2011381 LowProfile
LowProfile's picture

You really think they'll be able to buy property here?


Mon, 12/26/2011 - 03:37 | 2011391 wisefool
wisefool's picture

They are already aquiring rural land. In the 1980s the Japanese bought lots of urban property.

What would stop them?

Mon, 12/26/2011 - 03:50 | 2011400 Peter_Griffin
Peter_Griffin's picture

If you did try to stop them they would most likely use one of your family members as whale bait.  They are our new masters, just practice the silence and no eye contact rules, you don't want to visit Chintanomo.

Mon, 12/26/2011 - 03:54 | 2011404 wisefool
wisefool's picture

Hah! Thanks for the Vancouver reference.

Mon, 12/26/2011 - 14:02 | 2011940 JimmyCDN
JimmyCDN's picture

Q: What separates China from India?

A: The Fraser River.


Mon, 12/26/2011 - 03:39 | 2011393 Seer
Seer's picture

And there you go!

You see, nearly EVERYTHING is worthless, it's based on unsustainable shit/practices.  This is all about a major paradigm shift.  Some (morons) will cling to stupid trite ideological arguments, but that's got NOTHING to do with the fact that the current paradigm WILL fail because it's based on infinite growth on a finite planet.

"Worth" (as measured in the unsustainable paradigm) IS, therefore, meaningless.  What's your value to those around you, that's what the new "worth" will mean.

Mon, 12/26/2011 - 05:12 | 2011458 Tyranny is Love
Tyranny is Love's picture


This is all about a major paradigm shift...the current paradigm WILL fail because it's based on infinite growth on a finite planet.

Close but the program may be bigger than just the markets. Assuming the physicist in the video below is right growth is linked directly to available, useable energy. There are hard limits set by the laws of the universe to growth.

If we want to continue growth rates, (and achieve goals of enlightenment, immortality or at least extended life, and space travel) taking humanity to the next level of civilisation then we will need an abundance of EXCESS energy. Either a new source... or ... more efficient use of what we have already on the planet.

Luckily humans are really good at sharing and getting along with each other.

Otherwise the easiest solution (that the presenter doesn’t get into) would be reduce the energy consumption of the planets population by removing all people that are not required. Thereby creating an EXCESS of energy. 80 to 95% of the population could be a figure considered by some as being not required.

Of course this all depends on the energy requirements of societies goals and expectations, and on our ingenuity and ability to adapt and work together.


Big tree hug and high five, or everyone in deep s#!t.

Mon, 12/26/2011 - 01:24 | 2011268 El Gordo
El Gordo's picture

I'm reminded of the story about the city boy visiting his country cousin.   Bored, they decided to try their luck with some pigs.  The city boy told his cousin that he was having trouble getting aroused, wherein the country cousin replied "No wonder, you picked the ugliest sow in the pen."

Mon, 12/26/2011 - 02:56 | 2011365 RafterManFMJ
RafterManFMJ's picture



You must be a riot at dinner parties.

Mon, 12/26/2011 - 03:33 | 2011388 Conrad Murray
Conrad Murray's picture

The pâté was fabulous
Goose liva nigga

Mon, 12/26/2011 - 01:26 | 2011274 DoChenRollingBearing
DoChenRollingBearing's picture

Jubilee bitchez!

Mon, 12/26/2011 - 01:31 | 2011276 Ahmeexnal
Ahmeexnal's picture


More likely, those in debt and in good physical shape will end up in a gladiator ludus.

Ultimate global fight club.


Mon, 12/26/2011 - 01:33 | 2011278 q99x2
q99x2's picture

Hope the Bernank doesn't lend my mothers social security health coverage for her heart medicine to Japan so they can buy Chinese Bonds.

Mon, 12/26/2011 - 01:49 | 2011297 Harlequin001
Harlequin001's picture

Ooops, too late...

Mon, 12/26/2011 - 01:45 | 2011287 Perseid.Rocks
Perseid.Rocks's picture

> Hunan Provincial Expressway Construction Group is delaying payment on 3.11 billion yuan in interest

So these are non- interest-bearing loans. Nice, that's what we want is non- interest-bearing money. Only thing better would be non- debt-based money (that'll come with time I'm sure).

Mon, 12/26/2011 - 01:50 | 2011299 JPM Hater001
JPM Hater001's picture

Ok the sow thing was uncalled for.
Now, the thing is, neither the pig nor the lipstick beg the the right question. The right question is when do we go to slaughter? And as they say if you think you can tell me when it will happen-you my friend are either a liar or a fool...bitchez.
Next up Brian kilmead will tell you why he is smarter than Ron Paul who has "just said some crazy things about foreign affairs". I may be paraphrasing here but I am pretty close to 100% on the sentiment.

Mon, 12/26/2011 - 02:20 | 2011334 knukles
knukles's picture

I just went through a similar conversation with one of my uber faux conservative friends, him saying he was so worried about no repub being able to win this November. He got to a point of realizing that it was RP or bust (just the math) and commiserated that RP has said some crazy things in the past...

To which I pointed out that certainly no other politician hadn't, luckily.
He's been watching way the fuck too much FOX news.

Tue, 12/27/2011 - 10:50 | 2013431 VisualCSharp
VisualCSharp's picture

The GOP establishment is clearly worried about Ron Paul becoming the nominee. Listen to Sean Hannity's radio program -- he devotes entire segments to criticising Ron Paul, as if any of the other candidates are better. My own mother said to me the other day, "I don't like Ron Paul because of his stance on national defense," to which I replied, "You really think national defense is the #1 issue facing the US at this time?"

Mon, 12/26/2011 - 13:10 | 2011308 Freddie
Freddie's picture

I guess James Chanos and Hugh Hendry were right about China.  Hugh (in Scottish accent)..."look over my shoulder .... half a billion in someone else's liabilities...these things don't come cheap..."


Mon, 12/26/2011 - 01:59 | 2011312 walcott
walcott's picture

mongolian pig with lipstick bitchez..

Mon, 12/26/2011 - 03:54 | 2011403 wandstrasse
wandstrasse's picture

Now it is time to utter some criticism towards ZH: When you set the monetary system/financial issues in relation with pigs, then you should be more aware that you heavily insult pigs - which is justified by nothing.

Mon, 12/26/2011 - 03:58 | 2011409 Conrad Murray
Conrad Murray's picture

You ever try to put lipstick on a Matzah ball?

Mon, 12/26/2011 - 02:00 | 2011315 yogibear
yogibear's picture

So when does Greece bail out Japan? One big Circle jerk of can kicking and shell games.

Mon, 12/26/2011 - 02:01 | 2011316 jimmyjames
jimmyjames's picture

The central bank has held interest rates at 6.56 percent since July to boost the economy, while the US Federal Reserve and the Bank of Japan have kept benchmark rates near zero since 2008.


China raised and held rates high to cool the economy-(Inflation concerns)

The Fed and Japan lowered rates to goose the economy (Deflation concerns)

Mon, 12/26/2011 - 02:20 | 2011333 apberusdisvet
apberusdisvet's picture

Since when are lloyd and jamie running the Chinese economy?  Sure looks like a typical JPM/GS clusterfuck.

Mon, 12/26/2011 - 02:23 | 2011337 dalkrin
dalkrin's picture

Inquiring minds want to know:  Does Tyler partake of these Jeffries?  Before or after the writing of mind-stretching articles?


From my limited experience, those heart palpitations are no joke. 

Still, the afforded perceptions are priceless.  For everything else, there's liquor.

Mon, 12/26/2011 - 05:14 | 2011459 I got the Bull ...
I got the Bull by The Horns - HELP's picture

What are possible side effects of PROVIGIL?

Stop taking PROVIGIL and call your doctor right away or get emergency help if you get any of the following serious side effects:

Mental (psychiatric) symptoms, including: depression, feeling anxious, sensing things that are not really there, increase in activity (mania), thoughts of suicide, aggression, other mental problems.

Mon, 12/26/2011 - 15:00 | 2012026 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Sounds like :

"We were someplace around Barstow on the edge of the desert when the drugs began to take hold. I remember saying something like 'I feel a bit lightheaded; maybe you should drive . . .' And suddenly there was a terrible roar all around us and the sky was full of what looked like huge bats, all swooping and screeching and diving around the car, which was going about a hundred miles an hour with the top down to Las Vegas. And a voice was screaming: 'Holy Jesus! What are these goddamn animals?'"

Hunter S. Thompson, Fear and Loathing in Las Vegas

Except that it is not only legal, it is medically prescribed ...

Mon, 12/26/2011 - 02:32 | 2011344 bankonzhongguo
bankonzhongguo's picture

I used to sit and monitor these provincial and county level "loans."

Half the book was non-performing and the other half was performing because the army ran the show and that was before the state banks went Hollywood.  You think the US mortgage broker market was bad, now the loan officers and managers have a piece of the underwriting.

In those parts you used to backstop everything with some crazy 'letter of comfort," some BS power purchase agreement, some half-cocked SBLC from some parent company with restricted cash or pull your finance on off-balance sheet 180 day LCs.

The workout meetings go something like this; 'I can't pay you. What do we tell our bosses that made us give you these loans in the first place?  Business is bad. Let's have a meeting in 3 months. Sorry.' Repeat.  The only thing that gets asses in the seats is when some high level guys gets caught with their hand in the cookie jar, usually after their kid totals a Maserati Bora into Uncle Ping's slam-hound noodle shop or the local police station.

You think it's bad.  Its 10x worse than you think, but there are no real courts or other metrics to really measure performance.  You're safe if you run things.  You are in danger if you are passively invested. No different than the US of A.

The only real corporate governance comes out of the barrel of a gun and for the 0.01% that might have Stanford MBA, its all about the IPO or ripping the construction loan on the day you break ground and getting the hell out of town.  That was 3 years ago.

Dajia hao yunqi.



Mon, 12/26/2011 - 08:34 | 2011551 spankfish
spankfish's picture

"The only real corporate governance comes out of the barrel of a gun"... so Mao was right.  This theory should make the NDAA interesting. Can't wait to see who is assigned the job of the Federal Emergency Management Agency Ghetto Polizei

Mon, 12/26/2011 - 02:33 | 2011345 non_anon
non_anon's picture

mmmmm, sweet and sour pork

Mon, 12/26/2011 - 02:37 | 2011351 ravens9111
ravens9111's picture

china real estate bubble? what bubble? values drop 30% and there is nothing to worry about. i wonder how Macau and Cotai will do with all the new casinos being built. don't worry. that's not going to be like Vegas. they are totally immune from any bubble. Wynn Resorts, Las Vegas Sands, MGM, etc. will all make out very well paying top dollar for real estate. those casinos aren't overpriced. Las Vegas was just a minor correction. everything is great. all those ghost cities will be occupied one of these days. if not, they can always tear it down and rebuild it again to boost GDP some more. 

Mon, 12/26/2011 - 15:41 | 2012091 frostfan
frostfan's picture

Knocking down empty cities and rebuilding them, brilliant!!!!  Even better than two people

Mon, 12/26/2011 - 03:14 | 2011371 navy62802
navy62802's picture

OT - Has anyone looked at the spot gold chart between 2300 and 0700 GMT for 26 DEC? Insanity in the gold price.

Mon, 12/26/2011 - 03:26 | 2011382 wisefool
wisefool's picture

I onlly see the Nikkei down 70 and gold off $4.

Mon, 12/26/2011 - 03:33 | 2011389 navy62802
navy62802's picture

It's not the size of the move. It's the nature of the move. All of the movement in the gold price over those hours looks like a series of $2 step functions.

Mon, 12/26/2011 - 04:06 | 2011421 MsCreant
MsCreant's picture

Weird. Other metals too. Are they not trading? Or?

Mon, 12/26/2011 - 04:17 | 2011429 wisefool
wisefool's picture

NK off 95 now. Yen and CHF rising against the dollar. gold off $1.70

Mon, 12/26/2011 - 03:20 | 2011374 Conrad Murray
Conrad Murray's picture

Heeeyyy, Modafinil is great. If ever there was a miracle drug, aside from marijuana, it's this one. Everyone should try it out. Conrad Murray stamp of approval.

Mon, 12/26/2011 - 03:26 | 2011383 Peter_Griffin
Peter_Griffin's picture

China is as liquid as the beer shits.  Option A) Pay back debt. Option B) Use money to make a lot of fucking money.  They choose option B, good choice. 

Mon, 12/26/2011 - 03:38 | 2011392 williambanzai7
williambanzai7's picture

Debt Replofiring is what it is called.

Mon, 12/26/2011 - 12:20 | 2011792 onebir
onebir's picture

williambanzai7 - please put a cigarrette in the pig's mouth, a Mao-style hat on its head, and a packet of Zhongnanhai cigarettes sticking out of a pocket on it's chest.

Only then will the image be complete :)

Mon, 12/26/2011 - 03:42 | 2011396 Sudden Debt
Sudden Debt's picture

Who buys chinese muncipal debt? Are these bonds like in our country?

Mon, 12/26/2011 - 03:46 | 2011398 e_goldstein
e_goldstein's picture

That's a real purty pig.


Mon, 12/26/2011 - 04:01 | 2011412 Blank Reg
Blank Reg's picture

I just read about yet another bombing in Iraq. That didn't take long, we just pulled out of there. I talked with my 20 something nephew this weekend and he asked me where I thought he should put his money. That's when it hit me. I'm 54 yo and I told him I have never seen the world so crazy. All this isn't just academic speculation anymore. This is really happening. Bad things are coming. I felt bad for him.

Mon, 12/26/2011 - 04:04 | 2011419 Seer
Seer's picture

"Money" is for obtaining things that help facilitate one's life.  Focus on what is essential for life: Food, Shelter and Water.  Whenever I make decisions I keep this in mind, I ask how these TRUE fundamentals are being served by my decision.

Mon, 12/26/2011 - 08:40 | 2011556 spankfish
spankfish's picture

Advise him to live next to a boarder and have his passport ready.  He will need to exit stage right rather quickly.

Mon, 12/26/2011 - 04:02 | 2011413 Seer
Seer's picture

I think that Clarke and Dawe should update this piece to include the question: "Who is going to bail out China?"

Mon, 12/26/2011 - 04:15 | 2011428 MsCreant
MsCreant's picture

The strategy is to make it all absurd and unsortable. Japan, China, Euro Zone, US, whatever. Best bullshitter walks away with the wealth. 

We don't need a president, we need a sherrif. Someone should come out, running for sherrif, and promise to step down in four years after they have cleaned house.

Mon, 12/26/2011 - 04:23 | 2011433 Seer
Seer's picture

It's the SYSTEM!  Since it's based on the impossible, "cleaning" it up isn't going to resolve its root problems.

What's currently happening is that usury is being killed.  Usury is all about perpetual growth.  Whether there is an acknowledgement that perpetual growth is not what we should be basing our existence on would be the question.  The problem with letting this "cat out of the bag" is that it will mean the end of power for a LOT of people.

Mon, 12/26/2011 - 04:50 | 2011444 wisefool
wisefool's picture

As I understand it, The idea was based on unlimited growth of people willing to take on debt.  With western birth rates sub-replacement it is impossible to sustain. You have other cultures with booming populations who are debt adverse on principal, or are simply will to wait out this fiat buble. even if it takes 20 years to pop.

Mon, 12/26/2011 - 06:02 | 2011487 Seer
Seer's picture

We talk in terms of economics, but economics is only a MEASURE of what it's about.  THE thing is all about population growth.  Population sizes aren't, of themselves, THE issue, it's the consumption that's necessary to maintain them, and, just as bacteria and cancer cell growth informs us, the END always comes by way of consumption until there's a collapse.

I suggest no "solution" other than to call BS on the grumblings of people who blame esoteric shit for what is purely a straight up cause and effect fact.  Those that claim that it's because of "socialism" or whatever, well... either these people are plainly ignorant OR they are using it as a deception (and humans ARE all about deception: use such arguments to hide their own inabilities or fallibilities).

Mon, 12/26/2011 - 08:11 | 2011539 floridasandy
floridasandy's picture

if we actually got someone to clean house, i wouldn't want them to leave.

it's been a long time since we had an ethical leader.

Mon, 12/26/2011 - 04:20 | 2011432 chindit13
chindit13's picture

That second sentence has echoes of Taibbi-talk.

Mon, 12/26/2011 - 04:46 | 2011442 moskov
moskov's picture

Non-story at all. Chinese has been lending NO-INTEREST loan to a bunch of African countries and they never got paid back. What's the big deal?

Mon, 12/26/2011 - 05:23 | 2011460 Element
Element's picture

Dubai World v2.0 ... but much  M U C H  bigger ...

We're about to find out if MMT's claim that a Sovereign Govt can just print and buy any bonds it wants, and nationalise everything in sight, irrespective of any market or taxpayer, it true or false.

There is a catch, limited "real resources" in this case, leads to run away inflation.

So ... you ... er ... well, ... you need more and more resources just to keep it going ... to keep inflation down.

Gee ... where will they get those?


Mon, 12/26/2011 - 05:20 | 2011462 Tyranny is Love
Tyranny is Love's picture

This is all about a major paradigm shift...the current paradigm WILL fail because it's based on infinite growth on a finite planet.

Close but the program may be bigger than just the markets. Assuming the physicist in the video below is right growth is linked directly to available, useable energy. There are hard limits set by the laws of the universe to growth.

If we want to continue growth rates, (and achieve goals of enlightenment, immortality or at least extended life, and space travel) taking humanity to the next level of civilisation then we will need an abundance of EXCESS energy. Either a new source... or ... more efficient use of what we have already on the planet.

Luckily humans are really good at sharing and getting along with each other.

Otherwise the easiest solution (that the presenter doesn’t get into) would be reduce the energy consumption the planets population by removing all people that are not required thereby freeing up energy reserves. 80 to 95% of the population could be a figure considered by some as not required.

Of course this all depends on the energy requirements of societies  goals and expectations and on our ingenuity and ability to adapt and work together.


Big tree hug and high five.

Mon, 12/26/2011 - 06:38 | 2011504 Seer
Seer's picture

"Either a new source... or ... more efficient use of what we have already on the planet."

Jevons Paradox dispels the notion of efficiency being a savior.

As noted, it's all about TOTAL consumption.  I thought that the presentation (video) did a pretty good job noting this.

It's no "solution" to do a reset (reduce population size) and then continue the same non-steady-state practices.  I am quite sure that this will be presented as a "solution," but it'll be for those who wish to continue to control/rule (the same minds responsible for pushing the root of the problem to begin with).

"Luckily humans are really good at sharing and getting along with each other."

When there's abundance.  History is quite clear as to what happens when there is not: All wars are about resources.

BTW - If you follow my postings you'll see that I regularly blast the "economy is everything" meme, and that I regularly point out that it's about the physical world (which can only operate with physical resources, energy being key).

Mon, 12/26/2011 - 09:59 | 2011632 daily bread
daily bread's picture

Agree it is too late just to do a "population reset".  We've used up all the easy-to-mine resources to reach this stage.  Consider the "easy oil" that remains.  If the 10% who survive are "average", then the remaining oil could last 10 times as long.  But what if the 10% who survive a cataclysm are the resource hogs, and all the people with small carbon footprints are the ones who don't make it?  Then the remaining oil would still have the same bid, and the drawdown would run just as fast as it does today.  Conversely, if only people left after a global cataclysm live in out of the way corners of the world [and don't need much oil, etc.] then the remaining oil could last 100 times as long as current forecasts.

Mon, 12/26/2011 - 05:24 | 2011470 search
search's picture

Cool, WB7 felt compelled! This question of Debt is starting to seem like a question of Religion. What do you believe, can you manifest reality? If we all play along does reality ever become irrelevant? Maybe for awhile yes?

Mon, 12/26/2011 - 07:03 | 2011509 Bearfromkville
Bearfromkville's picture

Buy lipstick --- Long!!

Mon, 12/26/2011 - 08:36 | 2011553 Schmuck Raker
Schmuck Raker's picture

I don't understand why Tyler started this thread with a portrait of Gingrich.

Mon, 12/26/2011 - 08:55 | 2011565 MountainHawk
MountainHawk's picture

Ron Paul bashing with full court press at the Baltimore Sun.,0,2...

Mon, 12/26/2011 - 14:33 | 2011979 Schmuck Raker
Schmuck Raker's picture

Several more new pot-shots from Bloomberg as well.

I offer no link as I dislike trafficking them to their profit(Re:RP-Bashing at least).

Mon, 12/26/2011 - 09:09 | 2011577 papaswamp
papaswamp's picture

China has embraced can kicking (openly). It truely is a global economy now.

Mon, 12/26/2011 - 09:38 | 2011608 Schmuck Raker
Schmuck Raker's picture

Once China has it's own Rating Agencies all these 'issues' will disappear.

How do you say "presto - chango" in Chinese?

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