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Guest Post: One Alarming Indicator From China

Tyler Durden's picture


Submitted by Tim Staermose of Sovereign Man

One Alarming Indicator From China

For a few decades now, the Communist Party in China has had an implicit social and political contract with the Chinese populous for decades, which goes something like:

"We will deliver economic growth and improvements in your material living standards.  You will meekly do as you are told, refrain from dissent, work hard, save a huge percentage of your money, and ignore obvious corruption."

While nearly everyone in China has benefited to some degree under this current "system," the wheels are definitely starting to come off. Official GDP numbers are now slowing, real estate prices are falling, and inflation is quickening.

Now, I've made no secret that I'm decidedly bearish on China's medium-term prospects.  After my trip there back in June to conduct some good old-fashioned "boots on the ground" research, I wrote extensively about the massive overbuilding of apartments, office blocks, and all manner of infrastructure on an almost unimaginable scale.

Put simply, every year since 2005, more than 50% of China's GDP has consisted of construction-related spending.  The law of diminishing marginal returns says this simply cannot continue. 

It represents a misallocation of the household sector's hard-earned savings on a colossal scale, and I believe it will end badly.  Not a day goes by that there aren't riots and protests somewhere in China (including cyberspace) as the downtrodden man in the street reaches his froggy boiling point.   

Increasingly in China, though, those who see the writing on the wall can see that the days of system stability are numbered.  And they're not hanging around. 

For a number of years, mainland Chinese buyers have accounted for nearly all new apartment sales in Melbourne and Sydney.  On numbers I've seen, they have been investing between A$2 billion and $3 billion a year. 

An increasing number of mainland Chinese are establishing permanent residency and sending their child(ren) to school and university in Australia. And Simon recently reported that from an offshore strategies conference in Shanghai that the room was packed full of Chinese people learning how to diversify abroad.

They all want to have their options open when China's economy and political system hits turbulence.

Judging by the poor economic numbers coming out of China, this day of reckoning is drawing ever closer.  One alarming indicator is that the Chinese renminbi has traded down to the lower limit of its strictly controlled trading band for SEVEN TRADING SESSIONS IN A ROW. 

This suggests that there is more money leaving China than being earned from overseas trade or invested there. The exchange rate may be only one simple indicator, but it's a great barometer for what is going on: China is not going to be the savior of the global economy, but rather another casualty. 

If you have stashed some money in a Yuan-denominated bank account for the long haul, you'll probably still be fine relative to other paper currencies.  But, I would caution against expecting it to be a smooth, one-way ride to the top. 
Personally, I'd rather have the bulk of my savings in real wealth:  things like gold and silver bullion, productive real estate, and strong cash-generative businesses. 


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Fri, 12/09/2011 - 13:31 | 1963471 BigMike
BigMike's picture

Thankfully, I'm on a commune in Chile...

Fri, 12/09/2011 - 13:36 | 1963493 achmachat
achmachat's picture

but he sure knows how to sell ;-)

Fri, 12/09/2011 - 14:00 | 1963578 Ahmeexnal
Ahmeexnal's picture

Fucktards, they should have invested that 50% of their GDP on their own MIC.

Fri, 12/09/2011 - 14:09 | 1963606 trav7777
trav7777's picture

no...China is the FUTURE.  The MSM says so

Fri, 12/09/2011 - 14:35 | 1963702 eureka
eureka's picture

Construction & construction related finanzing used to make up 50% of US GDP !!!!  (Oh sweet miraculous days of post 911 to 2006) 

If you include US financialization of US construction debt - i.e. derivatives of construction and related debt - it makes up 75% of US GDP !!!

Hell, you could look at US Treasuries - i.e. new US debt per annum - relative to US revenue... if you dare !!

Alas, US construction is dead - and only the debt & the derivatives remain !


Where the fuck is the next bubble?

Or, as Adolf redux would say:  "Raus, Sweinehunden, wir mussen die nechsten "bubble" gleich finden. Wo ist es den da?"

Fri, 12/09/2011 - 14:38 | 1963723 BandGap
BandGap's picture

Sorts of sounds like our shovel ready, infra-structure reviving way out of these darks woods, don't it?

Sat, 12/10/2011 - 02:48 | 1965556 mkkby
mkkby's picture

So Simon learned about this from a short trip back in June.  Eat another goat dick, Simon.  Others have reported on the over building and riots there for years.

Fri, 12/09/2011 - 14:42 | 1963745 trav7777
trav7777's picture

dude...the MSM SAID IT.  And I refuse to question ANYTHING from the MSM that I want to believe

Fri, 12/09/2011 - 13:40 | 1963511 rockraider3
rockraider3's picture

You too?  Am I like the only one who doesn't live on this commune part time?

Fri, 12/09/2011 - 13:42 | 1963512 11b40
11b40's picture

Is Simon Black with you?

Fri, 12/09/2011 - 14:38 | 1963718 TGR
TGR's picture

Simon Black is a pretentious cunt. But more to the point, what is the "one alarming indicator" the drama-queen poster (who was exciled from Hong Kong - i.e. worse than the FILTH [Failed in London, Try Hong Kong] - and banished to the Philippines) wants the unwashed masses to retain?

Fri, 12/09/2011 - 15:14 | 1963881 11b40
11b40's picture

Not sure.  The increasing availability and declining price for prostitutes in the 3rd world?  Is that it?

Sat, 12/10/2011 - 00:29 | 1965419 TGR
TGR's picture

Increasing availability, and declining price, comprise two alarming indicators, not one.

In any case, a massive grain of salt is required to take anything penned by Black and his "Chief Investment Strategist", Staermose, who 'resigned' *cough* from Lehman brothers and fled from HK to the Philippines.


Fri, 12/09/2011 - 13:36 | 1963492 SilverRhino
SilverRhino's picture

50 million surplus Chinese men with no chance of getting wives.  Even the Chinese government may look at war as a nice distraction and unifying force for the peasants.

Fri, 12/09/2011 - 13:58 | 1963573 RobD
RobD's picture

Not to worry most of those 50 million are trying to hack into my FTP site. Seriously, I set up a FTP using Filezilla just to see if I could do it and I start getting all these pings going through my router and messages on the Filezilla screen saying "acces denied" so I check out the I.P.s and there like from 20 different locations in China. WTF are they looking for?

Fri, 12/09/2011 - 14:08 | 1963605 spinone
spinone's picture


Fri, 12/09/2011 - 14:44 | 1963749 Ahmeexnal
Ahmeexnal's picture


Fri, 12/09/2011 - 14:57 | 1963810 Cthonic
Cthonic's picture

Have this issue with every server I run.  They're constantly hammering away at SSH ports; wrote scripts that block whole IP ranges when reverse dns info shows a CN country code.

Fri, 12/09/2011 - 15:54 | 1964030 Let them eat iPads
Let them eat iPads's picture


Fri, 12/09/2011 - 14:05 | 1963592 kridkrid
kridkrid's picture

Of course they will, it's not even a stretch.  In fact, there are a number of governments around the globe right now who could use a little distraction. 

Göring: Why, of course, the people don't want war. Why would some poor slob on a farm want to risk his life in a war when the best that he can get out of it is to come back to his farm in one piece. Naturally, the common people don't want war; neither in Russia nor in England nor in America, nor for that matter in Germany. That is understood. But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy or a fascist dictatorship or a Parliament or a Communist dictatorship.

Gilbert: There is one difference. In a democracy, the people have some say in the matter through their elected representatives, and in the United States only Congress can declare wars.

Göring: Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country.


Fri, 12/09/2011 - 14:26 | 1963660 Saro
Saro's picture

Bullish for Chinese prostitutes.

Fri, 12/09/2011 - 14:40 | 1963733 BandGap
BandGap's picture

Sorry, but they could go for the world's record in the Circle Jerk.

Release The Lohan!

Fri, 12/09/2011 - 21:14 | 1965039 dolph9
dolph9's picture

Before that they'll try Han-ifying imported Vietnamese girls.  May not be enough.

Fri, 12/09/2011 - 13:58 | 1963498 JW n FL
JW n FL's picture



The Renminbi is Leveraged 1,200% before the ink is dry.

(In China the central bank, the People's Bank, is leveraged 1200 to 1.)

They build 10 - 15 Empty City's a year to be able to service their debt.

And.. I have been talking about this for a good long while..

Even Jim Rogers has capitulated! But with the caveat that farming +++ will carry the day for China moving forward????????????

People can grumble all they want but America is winning this World War.


Fri, 12/09/2011 - 14:03 | 1963587 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1  Good reporting JW!  

Great observation about us winning, I agree.


China does not look like a big problem to me.  With smart diplomacy, we should be able to avoid anything big and bad with them (same with Russia).  China has so many problems that are just not widely understood.

If the USA can get its financial system (even barely) under control (or a reset that does not sink us), then we will continue to do well vs. the rest of the world.  That is a big If though...

Fri, 12/09/2011 - 14:38 | 1963717 buyingsterling
buyingsterling's picture

So if we're lucky we muddle through under fiat, a little less broken than everyone else. No thanks, and not likely. Everything is decoupling; the casino wears no clothes. There's no new normal because everything is unravelling.

The best we hope for, IMO, is that any war(s) stay outside our borders and we come out of the worldwide depression without losing millions to violence and starvation, and with the police state moved to the border, where it belongs. Even flopping along like we are now, with the system perpetually propped up yet still floundering, is untenable - psychologically, at least.

Fri, 12/09/2011 - 14:40 | 1963731 JW n FL
JW n FL's picture



America already owns China.. the only way China was able to Verticle to begin with was American Investment.

Until 2 - 3 years ago American could own majority(s) Control in Company(s).

We own China.

this tit for tat that the sheep bat back and forth.. something to keep the diots occupied with?? that China is buying us?

there is no hope. it is soooooooooooooo beyond the common man to understand that there is NO HOPE in ever escaping this web of bullshit spun by the bottom feeders..

Fri, 12/09/2011 - 14:30 | 1963683 Alex Kintner
Alex Kintner's picture

Ha ha. USA WINNING# . What? In the Charlie Sheen sense?

$14 Trillion in debt doesn't feel like winning. So I guess all are losers.

Fri, 12/09/2011 - 14:37 | 1963712 JW n FL
JW n FL's picture



I should have went with Double Winning Drenched in Tiger Blood! LOL!!

Fri, 12/09/2011 - 15:17 | 1963895 huanjo
huanjo's picture

$14 Trillion in debt to who?

The winner is the one who doesn't pay back their debt, or pays it back at a reduced value.

Fri, 12/09/2011 - 14:36 | 1963703 john39
john39's picture

america who?  you mean the talmudic cabal that runs the show?  or the increasingly poor masses...

Fri, 12/09/2011 - 14:41 | 1963739 JW n FL
JW n FL's picture



You make it sound like the Jews give more money to Washington DC than the Bankers do! LOL!!

Fri, 12/09/2011 - 15:35 | 1963965 DoChenRollingBearing
DoChenRollingBearing's picture


Fri, 12/09/2011 - 19:08 | 1964728 TruthHunter
TruthHunter's picture

talmudic cabal that runs the show...


How come your dragging the Talmud into this?

The only relationship these guys have with the Talmud is genetic coincidence.

Fri, 12/09/2011 - 14:42 | 1963743 BandGap
BandGap's picture

Because farming in China has always worked???? Uh, doesn't it involve fresh water? The likes that China never had and will never see? Thought so.

Fri, 12/09/2011 - 14:43 | 1963747 trav7777
trav7777's picture

...and what they did have they have polluted beyond the possibility of human contact

Fri, 12/09/2011 - 15:38 | 1963974 WhiteNight123129
WhiteNight123129's picture

It is aready lost pal the debtor nations always lose open a history book.

Fri, 12/09/2011 - 16:24 | 1964152 Smiddywesson
Smiddywesson's picture

fiat is irrelevant when all fiat, all over the world, goes tits up, all at the same time, pal.

When the collapse comes, all that matters is how big your army is and how much gold you end up with in your vaults.  Right now, by that definition, the US is the winner. 

The Fed is clearly orchestrating this suppress gold price/kick the can and buy up gold dance.  The ECB is in on the scam as well.  There may have been no gold in Ft. Knox or under the NY Fed during 911, but there is now.  It's not how much you have on your balance sheet that matters, it's how much you actually control.  Don't believe me, believe Bernacke and Greenspan, they are the ones who wrote about it.

Fri, 12/09/2011 - 16:49 | 1964257 CynicLaureate
CynicLaureate's picture

Shh... the Chinese people might be listening.

We don't want them to understand that they've been working their asses off so they can subsidise our standard of living.  All we have to do is to send them electronic records of small green pieces of paper!

Let them continue to think they own us, right until we send them a sheet of paper that says "Federal Reserve Note $100 Trillion Dollars" and say "Okay, we've paid you back.  Enjoy this small green piece of paper".


Fri, 12/09/2011 - 16:52 | 1964267 CynicLaureate
CynicLaureate's picture

It is aready lost pal the debtor nations always lose open a history book.

Debtor nations that lose a war and have to pay reparations in gold always lose.

With Fiat currency it's trivial to pay your old debt; the trick is financing your new debt.

Fri, 12/09/2011 - 22:27 | 1965209 earleflorida
earleflorida's picture

grant is a japan bull, period

roger's &[hammerstein?] soros are  commi'fascists and could care less about the united states or democracy

Fri, 12/09/2011 - 13:39 | 1963501 Future Tense
Future Tense's picture

Chanos ripped it this morning on Squawk Box.  Said 70% of their economy was tied in directly to real estate development.  The anchors had no response to that.

Fri, 12/09/2011 - 13:47 | 1963532 11b40
11b40's picture

Those anchors don't have answers for anything, as they sit there with tight sphichter muscles praying none of the guests says anything that goes against the Wall Street line & makes them look bad in the eyes of their boss.  Spin, spin, spin.....never let the ball stop spinning.

Fri, 12/09/2011 - 14:11 | 1963613 trav7777
trav7777's picture

I almost get the sense you're suggesting I shouldn't believe much of anything I hear on the MSM?

Fri, 12/09/2011 - 18:50 | 1964687 Kayman
Kayman's picture


Uhhhh... I have to vehemently disagree. Those are NOT tight sphincter muscles.

Fri, 12/09/2011 - 21:10 | 1965025 dolph9
dolph9's picture

I sometimes pity them, seeing how they are dependent on looking plastic and telling lies into a screen just to get their meagre share of the trickle down fiat money.

But then I remember that they're prostitutes.  You choose your bed and sleep in it.

Fri, 12/09/2011 - 13:40 | 1963508 kito
kito's picture






Fri, 12/09/2011 - 13:45 | 1963522 tmosley
tmosley's picture

Who's "we" Kemosabe?

You are purposfully mischaracterizing a purposeful mischaracterization.  A few dozen students are marchin in some street, which is then mischaracerized into a national movement (but labelled peaceful by the sympathetic "journalist"), which you then mischaracterize as some sort of ongoing riot.

Why all the lies?  What's your agenda here?

Fri, 12/09/2011 - 13:51 | 1963544 kito
kito's picture

a few dozen students? talk about misinformation tmos----

in june of this year, there were between 100 THOUSAND and 200 THOUSAND PROTESTERS in CHILE!!! the movement is big enough to warrant its own page in wikipedia.


question to you tmos, how many of those plots did you buy from mr. black? and did he make good on his promise of free chilean inflation protection bonds and mermaids in the swimming pool?

Fri, 12/09/2011 - 14:11 | 1963596 Azannoth
Azannoth's picture

There is a Socialist movement in every country, it's good that the Chilean police is showing those young commies where their place is

If anything that Validates Simon's opinion of Chile as a Pro-Capitalist country

Fri, 12/09/2011 - 14:13 | 1963619 Ahmeexnal
Ahmeexnal's picture

Yes, chile is a pro-banker and pro-NWO country.
The Roths, the Rocks and the Morgans own 90% of the land there.

Fri, 12/09/2011 - 14:53 | 1963742 Azannoth
Azannoth's picture

There is a saying in my neck of the woods "Dogs don't shit in their own backyard"(rough translation) maybe if Chile is realy owned by the people you mention maybe that's the true reason why it's so good there

Yes the protests are real and the violence is real but did any1 bother to notice what the youths are protesting for? Free Education! as in Gimme You Money Nigga cuz I want to learn Art History, it's good that the Government will have nothing of it

"The movement's leader is Camila Vallejo, a young communist and president of Chile's main students' union."

and this

"The students are demanding a strictly not-for-profit education system that is free for everyone.

The government says that is unrealistic and that Chile can only afford to provide free education for the poorest 40% of its children. It also says there is no reason why the rich shouldn't pay."

Fri, 12/09/2011 - 14:46 | 1963758 buyingsterling
buyingsterling's picture

IF YOU BELIEVE a globalist conspiracy exists - beyond the obvious manifestations of it - then you'd be a fool to leave the US. The rest of the world is unarmed compared to the US; 300 million people with guns is the ultimate check on the NWO. Those people have to be neutralized, so eventually they will be demonized. Enclaves of Americans in other countries may find their once friendly neighbors becoming distant, while others eye their land and possessions with 'repatriation' in mind. Just like here, you'll have to defend what you have, but with softer footing.

Fri, 12/09/2011 - 22:34 | 1965228 earleflorida
earleflorida's picture

you mean shadow dirt owners, don't you?

cause the government [that is their ruler?] prides himself in human rights regarding how many canary's are not counted coming out the mine[s] of his sheeple?

Fri, 12/09/2011 - 14:14 | 1963621 kito
kito's picture

@azannoth--is this you simon???  funny, when its the chilean police beating and shooting student liberals, its the pro capitalist police doing their job, but when its the american police pepper spraying the lefties from OWS, then simon says its the oppressive totalitarian police state. riggghhhhhttt.................

Fri, 12/09/2011 - 14:27 | 1963671 CrazyCooter
CrazyCooter's picture

You get greens Kito.

I am not a big fan of Simon Black.

I would never move to a country that did not have strong common law roots. Period. This has to be the first filter applied. ZH readers are often upset over changes in American justice which are to a great extent the undoing of common law roots and principles.

I did my home work ... and I moved from the city ... I live in a small town in Alaska now. I have 100% hyrdo-electric power, I live in a temperate rain forrest (its raining lately - not snowing), and there is no heavy industry here so the air and water are pure. I am in state for hunting and fishing next Feb, at which point I will be stocking the freezer as fast as I can!



Fri, 12/09/2011 - 15:26 | 1963576 WhiteNight123129
WhiteNight123129's picture

As long as wages track inflation do not country on massive riots, An. Implosion of EU japan US is great political material for internal Chinese infernal polítics.

Fri, 12/09/2011 - 13:45 | 1963527 ali-ali-al-qomfri
ali-ali-al-qomfri's picture

hhmm, some Aussie friends, said that many own a house but rent/lease it out to freinds who do the reverse, some kind of wierd tax scheme...but Chinese buying up real estate as it is slipping in Oz are they fleeing a sinking ship for a burning barn.

Fri, 12/09/2011 - 13:50 | 1963543 11b40
11b40's picture

Does it remind anyone else of the Japanese and their thirst for American real estate a few decades ago?

Fri, 12/09/2011 - 22:37 | 1965236 earleflorida
earleflorida's picture

these wealthy are the kind,... the chinese are glad to see leave

Fri, 12/09/2011 - 14:07 | 1963599 GeneMarchbanks
GeneMarchbanks's picture

Canadian/Aussie property crash is still ahead of us and it should be preceded by banking drop.

Fri, 12/09/2011 - 13:48 | 1963535 Stuck on Zero
Stuck on Zero's picture

I doubt that this number of 50% of the GDP in construction is real.   Exports account for 30%. Services 43%.  That leaves little for healthcare, food, clothing etc.  I smell BS.  Check the facts:


Fri, 12/09/2011 - 13:54 | 1963558 PEanal_yst
PEanal_yst's picture

Learn to use net-exports.  For christ sake, go back to your 4th period before Mrs. Henderson sends a note to the principal.  You wouldnt want that on your permanent record.

Fri, 12/09/2011 - 15:39 | 1963761 Stuck on Zero
Stuck on Zero's picture

Mrs. henderson sent me to the Principal and she agrees with me.  50% is too much.  She said: "I smell bullshit."

Now you go to Mrs. Henderson and get your swats.

Fri, 12/09/2011 - 15:30 | 1963850 WhiteNight123129
WhiteNight123129's picture

Property 13% of GDP 47% of world steel is in China about half of Chinese steel goes in Property in general and 35% of world steel is using scrap. You remove 20-25% of steel demand in coincidente euro Implosion of Euro and hard lending in China. Since scrap is cheaper the brunt of the decrease in demand is shouldered on blast furnace , meaning that demand for iron ore can decrease by 35%.Given that the marginal cost curve is very steep l, iron price plunge. Given that cost are not so compressible margin plummet. VAle is the most iron exposed company with the highest cost of fuel to transport to China which is far from Brasil. Short Vale. The 70% refers to the portion of their economy in fixed asset investment.

Fri, 12/09/2011 - 22:46 | 1965263 earleflorida
earleflorida's picture

think boatloads of kk ton's iron ore on the cheap [daily]  via unregulated [land & mines] trade

india's (dirt in india is real cheap compared to australia's because of corruption & graff) so much closer

win win

Fri, 12/09/2011 - 13:52 | 1963546 WhiteNight123129
WhiteNight123129's picture

Well the only country which hás a credible cAse for deflation is China. Short VALE.

Fri, 12/09/2011 - 13:53 | 1963555 ChitownTrader
ChitownTrader's picture

Sorry bud, you lost all credibility when you said invest in silver (it's worthless). Gold much better, personally I recommend WTI crude when it falls below 70.

Fri, 12/09/2011 - 13:55 | 1963560 BigMike
BigMike's picture

What the fuck are you talking about?  

Fri, 12/09/2011 - 15:04 | 1963844 ChitownTrader
ChitownTrader's picture

You are right, I'm an idiot because in 08 when market collapsed price of silver did what? Thats right, it hit the ground. I made I killing shorting it then and will do the same again.

Fri, 12/09/2011 - 17:13 | 1964334 percolator
percolator's picture

Sure you made a "killing" shorting silver.

Fri, 12/09/2011 - 14:08 | 1963604 Smokey1
Smokey1's picture

LOL----Silver is worthless.


Applications include coinage,photography, jewelry, silverware, batteries, bearings, brazing and soldering, catalysts, electronics, medical applications, mirrors and coatings, solar energy, and water purification.

Yeah, I can't fathom a use for that worthless metal.

Fri, 12/09/2011 - 14:50 | 1963780 ChitownTrader
ChitownTrader's picture

Maybe you have heard of something called SUPPLY. There seems to be an overabundant amount of it, plus all of your used products you have mentioned can be recycled to reuse silver. Of all the things to buy in this world I cannot see why any investor would chose silver. Of course, it's so valuable it has lost 10% per day multiple times already and can't sustain its value.

Fri, 12/09/2011 - 16:41 | 1964224 Smiddywesson
Smiddywesson's picture

Of course, it's so valuable it has lost 10% per day multiple times already and can't sustain its value.

Sorry, that's the appearance they want to create for retail and the ignorant.  My take on the price action is titanic forces are being brought to bear to suppress silver and yet they can't keep the price of silver from continuing to rise off the mat.  How prices recover from a countertrend tells you more about the strength of the trend than where you are with respect to the moving averages or what price is at any given moment.

Fri, 12/09/2011 - 16:45 | 1964245 Smokey1
Smokey1's picture

 A brain-dead shit-eating maggot can spend a few hours on any of several fine precious metal websites and understand thoroughly the utter impossibility of settling the existing derivative contracts with the available supply of silver.

Kyle Bass visited and audited the gold last year at the commodity exchange. He said it was a fucking joke. He said the open interest far exceeded the available supply.  That's why he took delivery of $1 billion physical.

Newsflash-----Silver is far shorter than gold.

Google "silver price suppression " and read up on it, you fucking mongoloid, so that in the future you won't post idiotic comments about the metal.

Fri, 12/09/2011 - 17:00 | 1964292 Silver Bully
Silver Bully's picture

Don't short me, bro! A typical correction happens after 2010's ramp up and you think this bull ride is over? Sack up son, we're in a sideways consolidation phase, and will be for a while. Example: I bought in Feb 2010 at $15.55 an ounce. Price is hovering around $31-32 an ounce right now. Even if silver fell to $24, I've STILL made money. I bought gold at $1100, but it's still struggling to push $1800. Silver percentage gains are much higher than gold's. Would I have seen those surefire gains in, oh, Netflix? How about Groupon?

As for supply, it is NOT ample. There has been a stockpile of silver in the USA since before I was born. Not anymore. The US Mint has been importing Australian silver just to produce enough silver eagles FOR THIS YEAR. Wordwide the situation is becoming the same. Demand has outstripped supply for more than a decade, and the stockpiles are evaporating. Silver is mostly mined with other metals, it can't simply be ramped up like other commodities can.

The only reason silver's price has fallen is due to blatant paper price manipulation. In other words, your time to short is mostly past. Price is staying sideways because of high margins imposed multiple times by multiple exchanges this year. Price fixing does not work. The Comex and LBMA will be break themselves soon if they keep allowing price to be repressed, and keep margins artificially high. If those paper markets implode, price will then explode.

Fri, 12/09/2011 - 14:47 | 1963762 BandGap
BandGap's picture

And you keep this crude where?


Silver is portable.

Fri, 12/09/2011 - 14:49 | 1963773 Stuck on Zero
Stuck on Zero's picture

$250K worth of silver is not portable in my car.

Fri, 12/09/2011 - 17:01 | 1964296 Silver Bully
Silver Bully's picture

You carry silver in your car?

Fri, 12/09/2011 - 17:36 | 1964430 CynicLaureate
CynicLaureate's picture

That's only 536 pounds... you need a bigger car.


Fri, 12/09/2011 - 20:52 | 1964977 Stuck on Zero
Stuck on Zero's picture

Not much room left after I load all the ammo and food.

Fri, 12/09/2011 - 14:53 | 1963798 buyingsterling
buyingsterling's picture

He's from CHITOWN. Which means Chicago. Which means either criminality or sheeplike tolerance of corruption and evil. Or maybe he's one of the many from Chicago who's a great defender of freedom. You can add his name to the long list of freedom advocates who have come out of CHI (proper pronunciation 'shi' as in 'shit') TOWN. Complete list:














Fri, 12/09/2011 - 13:56 | 1963565 Saxxon
Saxxon's picture

Consider shorting BID; a very large percentage of fine art auction sales worldwide in the past decade have come by mainland Chinese using their new wealth to repatriate antiques.  I am hearing from numerous sources close to the auction business that auctions in the PRC are dropping off a cliff.  I have also heard and seen ample evidence of the same stateside.

BID's guidance should be interesting.

Fri, 12/09/2011 - 15:15 | 1963888 WhiteNight123129
WhiteNight123129's picture

I know i was short at 45 bucks. Bid is an incredible fiat bubble indicador . 89 Japan 2000 Internet, 2007 Russian oligarchs 2010 China stimulus.

Fri, 12/09/2011 - 13:57 | 1963567 PulauHantu29
PulauHantu29's picture

Good points. Hard assets are the way thru this mess no matter what country you live in.

Fri, 12/09/2011 - 13:59 | 1963575 laomei
laomei's picture

Hey look, another guy who doesn't know what he's talking about.


You can whine and complain all you want about construction here, but the truth of the matter is that there is TONS of room for MORE construction that is still needed and demanded.  Those "empty cities" will eventually fill up and in the meantime, they serve their purpose as a money sink for investors who can no longer prance about and speculate in the cities... you know where actual people would be affected.  A good chunk of those empty apartments also belong to those who owned the land pre-development.  When you lose a house to a development, you dont just get "another house", you get multiple houses plus a fat wad of cash.  Even with the housing market being deflated, check out north beijing.  Villa developments are selling out before they are built, 2 years in advance, 1.5-4 million bucks a pop and most take advantage of the cash discount.  Why are Chinese buying up overseas property? Because it's cheap as hell and higher rents can be charged which are essentially tax-free.  Securing multiple passports for children is also a big thing now, as it creates very strong advantages for them in the future.  China isn't in any danger at all.

Fri, 12/09/2011 - 14:09 | 1963607 Ahmeexnal
Ahmeexnal's picture

Yes, China is Australia's and Canada's new landlord.
But when TSHTF and the corrupt and bankrupt governments of Australia and Canada nationalize Chinese owned real estate, there will be one hella sticky situation.

Fri, 12/09/2011 - 14:10 | 1963609 Azannoth
Azannoth's picture

Drink Kool-Aid much?

Fri, 12/09/2011 - 14:11 | 1963612 kridkrid
kridkrid's picture

Everybody is in danger.  Don't be silly.

Fri, 12/09/2011 - 14:20 | 1963632 Heyoka Bianco
Heyoka Bianco's picture

I think "isn't in any danger at all" is overstating the optimisim, but it's true that this analysis could be made in a Chinese context blasting either the US or Europe (oversupply of housing, rich people fleeing, protesters in the streets), and they would be right. The advantage China has is slightly more room to move. If the standard of living drops in western China, would anybody even be able to tell? Compare that to people on food stamps in the US: how the hell are they ever going to get on the success tangent?

Fri, 12/09/2011 - 14:29 | 1963678 Ahmeexnal
Ahmeexnal's picture

A new joint reality show by ABC/CBS/NBC is about to come to your TV screen!


Fri, 12/09/2011 - 14:49 | 1963771 BandGap
BandGap's picture

Don't knock it till you've tried it.

Sat, 12/10/2011 - 08:47 | 1965787 Esso
Esso's picture

I have a neighbor who makes a damn good living for himself "scrapping" as he calls it. He drives around the night before trash is collected in neighborhoods in a little 4cyl Ranger pick-up looking for metals people throw out. Lawn mowers, air conditioners, wire, motors, gas grills, etc.

He primarily focuses on copper, aluminum, brass and any other high value metals, leaving the steel for the steel scrappers. Most of the stuff goes to the scrapyard, but some of the bikes, furniture, tools, and other nice stuff he finds goes to auction. A lot of the stuff thrown out is new-in-box. It blows my mind seeing how wasteful people are.

Fri, 12/09/2011 - 15:14 | 1963882 buyingsterling
buyingsterling's picture

Good question, and proof that either 1. there's no way to help them, or 2. our 'leaders' don't give a damn about them. If they could be helped, our benevolent leaders would have done so, were there a remedy, eh?

The remedy lies in weaning people off benefits over time, while freeing them to earn while still getting benefits. If we want them working, it's insane to force a choice between 100% dependence and 100% self-sufficiency. If we had a system which gave 100% of benefits for 3 months and tapered down 10%/month to zero, most people would make it, assuming businesses are freed up as well, and the cost of entry into business of all sizes is reduced through regulatory and licensing reform. Those who don't cut it will be mostly criminals, true charity cases, and the terminally lazy.

Fri, 12/09/2011 - 15:35 | 1963962 laomei
laomei's picture

The big thing is that living here, actually living here is cheap, the vast majority of produce is grown very local and there are price controls by the government.  The government sets the rates on mortgages (which are typically variable) and the government can change the terms on mortgages if people are suffering in large amounts.  Did ya notice that big push for public housing recently?  It's intended to be yet another bullet in the housing prices, rental prices and a boost for jobs all in one go.


Living standards, really it depends on what your "standards" are.  If, as the vast majority of normal city residents in Beijing do, you own your own apartment outright, living a decent middle-classish existance is around 2000 RMB a month for a family of 2, tack on another 1000 if you are raising a kid.  Average monthly income here is a tad over 4000 and it is highly weighed down by minimum wage city employees who get room and board covered.  This amount includes a car with some driving around, food, utilities, and a standard slew of things that companies will typically reimburse for.  Everything past that is gravy.  A family of 2 pulling in 8000 a month is solid lower-middle class and generally, people have packed away enough savings to last quite a long time before they need to start worrying.  Unemployed?  We got unemployment insurance as well.  It's not a huge sum of money, but it's enough to survive on.  There's also a "dole" of sorts which is enough to cover very basic living.  All of this is highly linked to CPI.  Chinese have been through bitter times, and it wouldn't really be earth shattering to cut back a bunch for the vast majority of people.  Most of our services are prepaid with no contracts, the vast majority pay credit cards back in full every month if they even use them to begin with.  And in a worse case scenario, there's enough food stockpiled to last 18 months.


Rich people? Who live excessive lifestyles and think they are entitled to it? Yep, they exist, no one cares if they "suffer" "hardships" though.  Most of us cheer when they do.



Is still a food exporter

Is rapidly developing energy security with billions being invested in next generation nuclear as well as green tech

Has vast national as well as personal savings, with banks pushing customers to buy physical precious metals and take delivery

Has a ton of domestic oil which is being held in reserve (seriously, if you know people in the industry here, it's just hilarious to hear the stories)

Has the ability and will to create millions of jobs as needed to stabilize the economy

Has a government capable of smart decisions and long term planning

Has industry that is rapidly moving up the value chain


I am seriously not concerned with the future prospects of China, regardless of how many dumbshits think they can write an article after wandering 10 minutes outside their hotel and talking to a taxi driver through an interpreter on the way to/from the airport.

Fri, 12/09/2011 - 15:55 | 1964034 WhiteNight123129
WhiteNight123129's picture

Ni hão laomei. I am not worried about China. You have a Classic housing bust and banking crisis. Nothinglike 2008 USD just a good old housing bust but Nothing too systemic.I Like your currency, like some HK stocks, like the fact that 8 out of 9 politburo standing committee members are engineers instead of fucktard talk well lawyers like in EU and US, you guys are ok, you will have atemporary crunch but You are ok. You should soon privatize some SOE which will really start the for profit equity culture in China. Good luck to you guys.

Fri, 12/09/2011 - 15:22 | 1963924 WhiteNight123129
WhiteNight123129's picture

TOTAL utter crap checo the city price on The guy is totally wrong in USD but he has data on Property price increase decrease.. Check numbeo affordability indexes. You yuan is fine but your Property bubble is going bust as we speak. Remind me to Check the result in 6 months.

Fri, 12/09/2011 - 19:05 | 1964723 Kayman
Kayman's picture
 laomei Echos of Tokyo in 1989. Nikkei kissing 39,000. So glad you Chicoms have figured out how to suspend the laws of supply and demand, of diminishing returns, and gravity. Good luck with that flying too close to the Sun thing.  Gosh, I hope that wax you're using isn't "made in China".
Fri, 12/09/2011 - 14:02 | 1963583 pirea
pirea's picture

"For a number of years, mainland Chinese buyers have accounted for nearly all new apartment sales in Melbourne and Sydney."

Not only. A friend of mine real estate agent in Vancouver, told me that a chinese guy bought 3 houses in a row in West Vancouver (range of 2-5 millions per house, with money down and no questions asked. This is why the real estate market in Australia and Western Canada is a perpetual boom.

Fri, 12/09/2011 - 14:15 | 1963623 Don Smith
Don Smith's picture

Until it's not...

Fri, 12/09/2011 - 14:23 | 1963635 GeneMarchbanks
GeneMarchbanks's picture

'Zakly. But you have to love how the normalcy bias works...

Massive distortions have a tendency to over-correct. That should be fun.

Sat, 12/10/2011 - 15:22 | 1966400 WhiteNight123129
WhiteNight123129's picture

Well if you have some stocks trading at 9% dividend yield FCF at 20-25% (some companies are like that in HK). Well you have an implosion of banking system in China So what? That is business as usual from a long term perspective. The question is if the currency and Gov can handle the transfer of debt at the sovereign and China is still able to do that. The US had a couple of banking system implosions with Latin America, the banking system in the US was fucked utterly, Volcker managed to conceil it very well that´s all. That situation in 1980 would not be enough to make the US currency implode though. There was S&L and other crisis in the US. CHina might have a mother of all crisis in 20 years, but the US and EU have their currencies blow-up now. Now tell me it was a bad idea to buy Muni Bonds in 1980 or buy KO at 6.6% DVD and 9 times earnings in 1980 and I will tell you you are a one poney trick pirea. Being negative on banks, construction and base metals does not mean that China will sink in the Sea. Gold is not always the best asset in all circumstances, it is now, but it will not be eternally. You will have to have the discipline to remonetize your Gold when other assets look better.

Fri, 12/09/2011 - 14:05 | 1963591 Shizzmoney
Shizzmoney's picture

I cant wait for the day they shut down exports to the US.  Its gonna be lulzy

Fri, 12/09/2011 - 16:40 | 1964217 Snake Plissken
Snake Plissken's picture

WW3 before then.

Fri, 12/09/2011 - 14:07 | 1963598 kralizec
kralizec's picture

"Personally, I'd rather have the bulk of my savings in real wealth:  things like gold and silver bullion, productive real estate, and strong cash-generative businesses."

Productive real estate?  What, like prisons?

Fri, 12/09/2011 - 14:12 | 1963616 idele
idele's picture

   Australia does everything to encourage Chinese students to enroll in their universities. The rewards if they are sucessful are immigration for them AND MEMBERS OF THEIR FAMILY. They're beating the USA as the Chinrse student population is diminishing here. I learned this on a trip to Australia in 2009  for a conference at the University of New South Wales.

Fri, 12/09/2011 - 14:22 | 1963640 Ahmeexnal
Ahmeexnal's picture

Chinese only like down under because of the flied koala.

Fri, 12/09/2011 - 14:24 | 1963652 TGR
TGR's picture

*Flicks dogshit all over this thread, all over Tim Staermose, and all over anyone who thinks anything or anyone related to the caped-crusader that is Sovereignman is worth more than a dime*

Fri, 12/09/2011 - 14:38 | 1963724 TheSpiritOfTheTimes
TheSpiritOfTheTimes's picture

Oh, come on guys. There aren't going to be any revolutions of any kind in the world. Not in the US, not in Europe and even less in China.

Sheeple get shaved and sometimes slaughtered. That's the way it is.That's the way you want it.

How do I know this?


None of you have started the revolution yet and no one will.

That's where it ends.

All US citizens please report to their assigned detention cells before 21.00!

Fri, 12/09/2011 - 14:45 | 1963753 JW n FL
JW n FL's picture



Off topic but a funny none the less!


Dear Mr. Workman,


 Thank you for contacting me regarding the United States sugar policy. I would like to take this opportunity to address your concerns.


 Over the past year, Congress has attempted to find ways to promote economic growth and create jobs for Americans, while at the same time address Washington's out-of-control spending. At a time when Florida faces an unemployment rate over ten percent, and the country faces more than $15 trillion in federal debt, it is now more important than ever that Congress carefully consider the cost and economic benefit of each and every program funded by the federal government, from entitlements to agricultural price support programs. I am reviewing current legislative proposals that focus on the reform of specific agricultural programs, including those related to sugar, and will remain mindful of your thoughts as the 112thCongress continues to address the economic issues facing our country today.


Again, thank you for taking the time to share your thoughts with me. It is an honor and privilege to serve the people of Florida. If I can be of any further help to you, please do not hesitate to contact me.


this is over a petition I signed against this scumbag.

FanjulCorp's Flo-Sun company is frequently criticized as being the largest recipient of U.S. Government aid and heightened profit due to the protections levied in favor of U.S. sugar producers. It is widely known that sugar costs about two-three times as much in the U.S. as it does on the world market.

FanjulCorp benefits significantly (their net profits average an additional $50 million to $100 million per year due solely to the quota and break-even program). The Fanjul brothers were large shareholders and directors of Southeast Bank before its takeover and liquidation by the FDIC in 1991. In addition, they are the majority shareholders and directors of FAIC Securities, which was investigated by the S.E.C. for regulatory violations.

Their estimates fortune is over USD 500 Million according to the book “Tricks of an IRS Cheat and other scandals you should know about Uncle Sam” page 82, , other magazines refer to them as Billionaires(see article below).


 so I responded!




I will see you at the Fanjul's Christmas Party and we can talk about it then.

Your blanket response to the sheep of the World does not hold water with me.

Good Luck! Fucking over Your Constituents’ and everyone else in Florida.

You are a bought and paid for whore.

Sincerely, James Workman








Club for Growth






Elliott Management






Senate Conservatives Fund






Goldman Sachs








Flo-Sun Inc






State Farm Insurance






Koch Industries








MCM Corp






WPP Group






Crow Holdings






GEO Group







Sun Capital Partners






Demetree Brothers






KKR & Co






CSX Corp








Affiliated Managers Group






Contran Corp








Hilliard Brothers of Florida






The Villages






Publix Super Markets







 notice the Koch Bro's! LOL!! same crowd, same bullshit.. never fucking ending subsides..

 they feed from the Tax Tit! you eat their shit!

welcome to America!

Fri, 12/09/2011 - 15:04 | 1963845 AGuy
AGuy's picture

Not to worry. This is all part of the Chinese. Plan:


1. Build excessively to create jobs and improve domestic infrastructure.

2. Let the system collapse to point widespead riots and arson happen.

3. Create new jobs, cleaning up after the riots and rebuild the building destroyed by arson.

4. Rinse and Repeat until the Sun changes into a red giant.


BTW: This is sarcasm and for humor, for those of you with short tempers.

Fri, 12/09/2011 - 15:31 | 1963946 moskov
moskov's picture

I see a lot fiat jerk heads getting high with this junk piece. The fact is China has been industralised at an epic scale and it has plenty of space for its growth. It might not be perfect, but far productive and sustanable than the EU and the US while everything they are living on is debt and imports. Most importantly most of their population cannot undertake another shock of great depression because the potential collapse of the welfare state. You hear about American mum shot her kids and kill herself because she cannot have food stamps. I can almost imagine the political outlook of the US would be as ugly as the collapse of Soviet Union while the entire country became planed economy and failing police state. Keep writting this junk because the God will judge on the West very soon just like the trend going on in the 21st century

Fri, 12/09/2011 - 16:56 | 1964277 WhiteNight123129
WhiteNight123129's picture

A lot of comments are simplistic here. A banking crisis a real estate bust does not imply a major currency crisis.Just kiss bye bye 10% GDP growth. Nothing really terrible about that. If you have a tiny stock allocation some portuguese and greek exporters and long a few Asian stocks which are really beaten badly.

Fri, 12/09/2011 - 15:53 | 1964018 Kapital Xposure
Kapital Xposure's picture

as i walk through our largest shopping centres here in melbourne, the asian money is absolutely evident.

we have the same queues at the major labels, chanel, gucci, LV,  long lines.... as usual before the christmas event.

what you see thats different to other seasons is that in these lines, there are only a mix of asians customers.. the money is totally in their hands.  they have the firepower to consume high end luxury goods on mass.

each store is proportioned with far in excess of 50% asian shop assistants..

of course when your in the stores it reminds you of KL or singapore, your hearing an amazing apread of asian languages.

i have no doubt the housing bubble in australia is asian driven, with more than 40% of new house and land packages being sold into malaysia and china. and as the author above reminds us, the apartment sales are vastly asian here in melbourne.

their bubble is our bubble... we have such a small population, their thirst for better medical, more freedoms and their fear of their own place of birth, their reluctance to remain in the frenzy that is china, really is very evident in australia. and its impact is amazing.

we have a dynamic and inceredible mix of people here, nad will become richer in all respects fom it.

melbourne and australia is a welcome place for many, from war torn africa to affulent asia..

cant beat a city that is breathing such diversity...

its the best place in the world despite its bubbles!!

Fri, 12/09/2011 - 16:01 | 1964059 GeneMarchbanks
GeneMarchbanks's picture

'its the best place in the world despite its bubbles!!'

Been there, you're exaggerating big time, plus clearly you're no local seeing how your post is riddled with spelling errors.

On second thought ... it is Australia...

Fri, 12/09/2011 - 16:45 | 1964246 Snake Plissken
Snake Plissken's picture

It's a shit hole, no culture, no history, no water and soon no social unity or cohesion due to mass immigration from Asia.

Sat, 12/10/2011 - 15:09 | 1966377 Ahmeexnal
Ahmeexnal's picture

It's a fucking penal colony for fucking christ's sake!

Fri, 12/09/2011 - 20:43 | 1964948 TSA gropee
TSA gropee's picture

Laomei would have those who have not been on the ground much if any in China that overall life there is pretty good and not too difficult for the "average" Chinese. This is complete bullshit. I suspect Laomei must be from and have grown up in one of the larger cities such as Shanghai and not gotten out much beyond its borders. I've been going there since 91' and have done 6 trips this year alone for a total of over 4 months. Due to the nature of my business I end up going to places so far off the beaten path that I'm often the first western person the taxi driver has ever had. I've been as far north as Tianjin and as far south as Zhuhai as well as such places as Zhucheng, Taian, Hebei and often take the subway,train or bus to my destinations. As an avid people watcher I find the subways are the best place to gauge a society as a whole as one sees a large cross-section of middle class and lower peoples. Many if not most people are buried in their cell phones while others stare blankly across the aisle or at the videos being played in the subway car. One gentleman in particular stuck out on my last trip, he seemed to stare at me but it wasn't long before I realized he was really staring through me. His face was tanned and lined from what I thought was a difficult life and I got the distinct impression he was just waiting for his life to end. The average Chinese person from my observations and with working with our local engineers and techs is that life is very difficult. Those born into privilege obviously have a different take and from a statistical standpoint are the outliers. There is an extreme apathy and indifference that exists between the people to such an extreme that the value of a life has monetary amount associated to it. This is evidenced best by the video of 2 year old Yue Yue being run over twice with up to 18 different Chinese passing by, some without even acknowledging her still moving body. It is imho, the ultimate display of a hollowed out and Godless communist society.

Fri, 12/09/2011 - 20:56 | 1964981 ozziindaus
ozziindaus's picture

I left Melbourne over 10 years ago. Not for good, but I simply got priced out of a decent living in the profession I chose. Every year, the cost of living escalates but wages barely budge. A AUD$100K salary in my field of work in Melbourne would be regarded high and you should appreciate it. In the US, the same salary in USD doing the same job would be considered a joke. Worst still, the cost of living is less than half here.


3 bedroom house in an upper middle class neighborhood with 2 cars (one being a brand spankas Merc.) is achievable on $USD100K. In Melbourne, try AUD$300K with Raumen noodles for dinner. I know this because it bothers me daily. 

I guess I wont be returning for a while......think I'll just wait until the AUD=0.5USD again. 

Fri, 12/09/2011 - 22:56 | 1965272 deflator
deflator's picture

China is the future... but not until after the "great crash". Uncle Sam will continue to exploit USD hegemony until every nation is in chaos and has no choice but to create a new monetary system.

 The U.S. can import oil, refine it(at a loss) into gasoline and diesel fuel and export it, except it really isn't a loss because we created the dollars to purchase the imported oil out of thin air. The U.S. is now exporting more gasoline than it has in 62 years. This is the latest scam perpetrated on the world to exploit USD hegemony.

Our entire economic model is predicated on(the assumption of) infinite energy. The status quo would have us believe that energy is infinite and should be infinitely discounted while the status quos money that is created out of thin air should be infinitely appreciated. Nevermind that your labor, whatever it is, is energy.

Sat, 12/10/2011 - 01:24 | 1965495 chindit13
chindit13's picture

There is some international market research firm (I'll try to find the link) that gathered some interesting data on China.  Most astonishing was this:

The average Chinese person under the age of 35 years has savings of ZERO.

Sat, 12/10/2011 - 14:43 | 1966336 SPADOC4
SPADOC4's picture

Still waiting to see scans of passport stamps....

Till then, it's all BS from some loser sitting around in his underwear in his mama's basement

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