Over the past several months we’ve seen at least three examples of Chinese defaults including Baoding Tianwei Group, a subsidiary of state-owned parent China South Industries. This suggests Beijing will begin to take a more hands-off approach when it comes to propping up borrowers. The latest example is a profitable duck processing company, which FT says has defaulted on its debts after banks refused to roll over its loans.
May was a banner month for car sales and it's easy to see why. Nearly every conceivable metric for financing hit a record in Q1 according to Experian, including average loan term and average amount financed, suggesting the trillion-dollar US auto loan market has officially hit bubble territory. Meanwhile, the "cash out auto loan" is the new home equity loan.
Presented with little comment aside to note that every now again the truth bubbles out from behind the mask...
During “normal times” – an economic growth phase accompanied or generated by rising systemic leverage – central banks have incentive to promote nominal growth and inflation, which make banking systems profitable and their free-spending political overseers happy. In such times, commercial banks have fiduciary responsibilities to shareholders to constantly increase their market values, which they do by expanding their balance sheets. Now that economies are highly leveraged, extinguishing debt would require banks to reduce the sizes of their loan books, which would shrink their market values. Thus, it seems economic policy makers never have incentive to promote debt extinguishment in the banking system, regardless of economic conditions or prospects.
As it turns out it is not just a US "thing" to blame the weather. Enter the Bank of India, which overnight cut its benchmark rate from 7.5% to 7.25%, as had been largely expected, taking India's interest rate to the lowest since September 2013. The punchline, however, was when RBI's governor Raghuram Rajan gave his outlook for the possibility of future rate cuts, saying he would have to wait to assess monsoon rains before acting again.
Following the Chinese stock market's worst drop in recent history, a record-smashing 4.4 million new 'investors' opened stock-trading accounts last week, confirming that - despite the words (but no actions) of the regulators - China's BTFD market mania (after all the PBOC will just bail them out, right?) is in absolute full swing.
It is hard to believe that in these allegedly enlightened times this question even needs to be asked. Are there really educated adults who believe that by dropping helicopter money conjured from thin air, the central bank can actually make society wealthier? Well, yes there are. They spread this lunacy from the most respectable MSM platforms.
According to Bloomberg, six Nigerian central bankers were charged with fraud in an 8 billion naira ($40.2 million with an m, not a b, not a tr) currency "scam." No chat rooms here, just a plain old "mega scam involving the theft and recirculation of defaced and mutilated currencies,” the Abuja-based Economic and Financial Crimes Commission said in a statement dated Sunday on its website. In addition to the central bankers, among those charged are also sixteen commercial bankers who conspired with Central Bank of Nigeria regional executives.
"...'Keynesian' economists, have sold to the public a 'quasi-doctrine' which teaches, in effect, that (in other words) 'bad money is better than good money'... a 'Keynesian' would favor the existence of a 'manipulative' state establishment of central bank and treasury which would continuously seek to achieve 'economic welfare' objectives with comparatively little regard for the long term reputation of the national currency."
It wouldn't be the new normal without a "Greek deal imminent" rumor/headline and so after overnight China-based strength gave way to selling pressure, another twitter-based rumor of "chatter" of a Greek accord (which given yesterday's comments seems extremely unlikely anyway) sparked a malt-up in EURUSD and US Equity futures. However, as is always the case, Virtu's algos as usual forgot to sell when the official denial occurred just a few minutes later.
— U.S. Embassy Syria (@USEmbassySyria) June 1, 2015
By accepting the story as told without regard to integrity of truth we have allowed ourselves to become feed for those controlling the story and thus the system. As the charts above clearly depict we have two distinct economic states. One is perceived and the other is real. The perceived state gets sole attention allowing the economic cannibalism to continue and draws us further out to the middle of the lake. And as the ice disappeared so quickly not yet 7 years ago it will again reveal itself only a perception created by policymakers for sycophants so willing to feast and profit on the rest of us and, perhaps more startling, on their own future well being.
Just when everyone thought it was fixed, crude inventories start building again as API reports (for the 2nd week):
*API SAID TO REPORT CRUDE SUPPLIES ROSE 1.8M BBL LAST WEEK
This follows a surprising 1.3 million barrel build last week reporrted by API. WTI slipped back to $61.00 after hours...