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Who Is Bailing Out Whom?
Presented with no comment - except to suggest that perhaps it is time to revise the near-daily "China bails out [insert insolvent "developed" country here]" rumor algorithm...
Chart: Bloomberg
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Who's my secret Santa?
uuuhhh.... How can we conclude that China is bailing out USA with this? This can also show that the Federal Reserve and its merry men and women, who are really men, can inflate the dollar better than any other country.
Why not show the treasury/currency positions in China's piggy bank...?
Years ago Jim Rogers mentioned that China would go through a gut check and, depending how they respond, that would be the buying opportunity. Gut check in 3...2...1...
I always need a gut check after having chinese.
Dalago
Does this help?
UPDATE: China Net Buyer of U.S. Treasurys in July, Remains Top Holder
http://online.wsj.com/article/BT-CO-20120918-707608.html
http://buzz.money.cnn.com/2012/09/18/china-us-debt-tic/?iid=HP_River
lol
Are Chinese Banks Hiding “The Mother of All Debt Bombs”?
http://thediplomat.com/2012/09/10/are-chinese-banks-hiding-the-mother-of-all-debt-bombs/#
China IS the largest foreign holder US debt but the largest holder overall is the Federal Reserve. So with THAT said... the federal reserve is insolvent. The bank of last resort is donzo.
Bernie Madoff.
I hope you need a slightly worn shank and new license plates...
The bailout's will continue until morale improves.
LOL!!!
He who manipulates best manipulates last.
<When playing with da boyz he who has all the toys at the end wins. Doesn't matter if there is no place left to play with them.>
"All war is deception." - Sun Tzu
"It's the flow, not the stock." - Tyler Durden
<Nice long term deception by the Fed. Are we at war with the Fed?>
Or, "deception is war..." Humans ARE deceptive because that's how nature works and humans are OF nature.
China is buying real gold with non-existent steel. USA better up it's game.
Considering how long people have been in shock and awe of the so-called "China Miracle" I would say the USA has some catching up to do.
Don't forget about the top leadership change coming to China. Many "disappointments" are announced then to "cleanse" the political system for the new regime. Not good for illusions.
For the past decade I have provided training, both here and in China, on US best practices in Wealth/Portfolio management to executives and PMs of various large Chinese banks. (CCB, BoC, etc.). 2 months ago, CCB cancelled their entire fall training schedule, and last week BoC did the same. Cancelled until further notice. This, coupled with the PWC headlines posted earlier, makes me think they have a banking/credit crisis coming (real estate collapse?). Short Chinese banks.
long - tungsten filler
Smart shoppers insist on only the finest tungsten filling for their gold bars and coins.
Or at least they think they're buying real gold. Oh well, they can always use the tungsten in their bullets.
They know they're buying gold - they drill every bar upon receipt.
Who gets to keep the drill shavings?
Because the gold is fungible, they scrape out the middle then wrap gold around tungsten.
Insolvent bailing out solvent. And here I thought that folks with no money could not possible be the ones to save the world. Sort of like Mitt's tax comment. if a person has no money, how the fuck would you expect them to pay anything?
Wake up people, humanity is the fucking ponzi, the fiat problem is simply a manifestation of the underlying moral hazard. Until the moral hazard is addressed, it will only get worse and paper-pushers will continue to steal wealth while people who create real value will continue to lose their jobs. hedge accordingly.
First contact with the Vulcans is just around the corner. They'll know what to do.
edit: Stupid me. Looks like they landed in Bozeman in 2003, said "fuck this shit," and went home.
Yep, they took one look at President Bush and instantly knew this planet was devoid of any intelligent life.
Cliche, over used, and irrelevant compared to the real Clown in the WH we have NOW.
Yeah but in what currency are these indexes denominated?
Why exactly is SHCOMP so down? It's almost 60% drop from the top I think. No other index has plummeted so much. Is China oversold? Gundlach seems to think so. Is it worth buying?
The unofficial reports out of China is that their GDP is shrinking and they have a large amount of non performing loans. All of their customers are broke.
Except SHCOMP never picked up much after it's drop in 2009. I think the Chinese elites have been buying US stocks and basically moving their money to the US.
Quick, someone spread rumors that Europe will bail out China!
Actually, I've heard that the Antarticans will bail out China AND Europe!!!!
No one is bailing out anyone. The banksters are stealing everyone's money and that is that.
this
"I watched Hoarders. Those people are sick in the head."
When it is newspapers or magazines its hording
When it is Fiat paper it is Finance & Banking
Anyway you look at it "Those people are sick in the head."
THe Fed is not engaged in wealth effect at all.
The Fed is in the process of cornering the Treasuries market so that it can later drip the long end of the curve backwards and force people to dishoard their cash.
The Fed wants to avoid the situation of Japan where the Government bonds are stuck in the hands of people and so the BOJ has no control of hte curve.
SO part 1. Buy all of the bonds,
part 2 make sure people know you are a crazy printer.
(As students of the banking school anti-bullionists know higher long end curve always make the cost of production higher while lower rates are deflationary).
part 3 Have the good guy Fisher warn about inflation expectation moving up
part 4 Sell a tiny bit of your long end of the curve so you steepen the curve while everyone thinks you are just buying and so people get to believe there is inflation. Cheat on your accounting so that people do not figure it out, buy other stuff so people do not see you are moving the long end of the curve upwards.
part 5 Get the people to compute their implied inflation data from the curve and worry about inflation
part 6 People worry about inflation, so inflatio becomes self fullfilling.
part 7 You just managed to have the people with money forced to spend COrpoartions and Rich (the Richest people control 1.7 Trillions in wealth).
part 8 People with financial assets (cash bonds ect) convert those assets back in the circulation (wages) forced by the unclogging performed by hte Fed (manipulating inflation expectations and creating inflation by hte same token)
part 9 Circulation to Debt ratio finally rise nominally, financial assets suck, equities goes up and down, long bonds in bear market for decades
part 10. Stagflation makes earnings poor, wages up, Gov debt to GDP down, commodities up.
The trick is not to do that too fast to avoid crack-up boom. You just saved hte country, helped the share of wages vs capital reverse course, you fucked the bond holders and the rich, and started a deleveraging.
ANY QUESTION?
What could possibly go wrong?
Many Many many things can go wrong, but there is no joice someone has to pay and it can not be either the Gov or people because both are broke, but Corporations and the Rich benefited massively from the deleveraging point the fire thrower printing press on them and they will spend and by the same token shoot in their foot, their spending will make the value of financial assets plunge against real assets and wages will go up because of tehir very spending. Economy is zero sum game except for the technology improvement and thanks to scientist we do not leave in caves anymore. The patsy at the poker table is not who you think it is.
"People with financial assets (cash bonds ect) convert those assets back in the circulation (wages) forced by the unclogging performed by hte Fed (manipulating inflation expectations and creating inflation by hte same token)"
and "Stagflation makes earnings poor, wages up, Gov debt to GDP down, commodities up."
-----------------------------------------------------------------------------------
Right, now why would wages go up, especially with so many talented people out of work? This isn't the 70's, interest rates cannot go up either. You would need a sovereign debt jubilee first. Not going to happen, all fiat is dying, this is a death spiral, period. forget about the "flation" bullshit.
FAIL.
The wages would go up because MSFT, AAPL, GOOG, ORCL combined have a 1.6% of US GDP in net cash free of debt. If you manipulate enough inflation expectations, those guys are going to have fret about their cash. They can not buy hard assets and Gold the Feds would go in their office right away, Gold and Silver is ok for the little guy, I think the Fed does not need to go after them. I wonder how Paulson managed to buy so much Gold BTW....
Gold price up is the Friend of the Fed, the more it goes up, the more it makes the position of people sitting on idle cash untenable.
So what do these tech giants do with their money?
I watched Hoarders. Those people are sick in the head.
Spend in poor projects, (which is stagflationary because they output in relation to spending would not be so great). WHy would they do it? Because the short end of the curve is ridiculous while the long end slowly creeps up with Gold creeps up which is water torture for those holding cash but unable to buy inflation assets (Corporations).
Stock buybacks, bidding thusly the indices up in tandem.
True story.
Yes, they will do that to and they are doing that right now, as they did in the early 20s in Weimar borrowing to buy other companies, those are net net negative for the deleveraging. Same thing happened in the 1970s. Congress is dull, Congress should corner them on that, on acquisitions, stock buy-back and dividends so that to force their cash channel into capex.
I would hope that post elections Congress corner the corporations on the use of cash so that the only option left is spend on new projects.
Bullshit. Earnings still matter (probably the only thing that is not that manipulated), no customers, no earnings, period. You are also ignoring an underlying energy crisis as the world approachs the limit of it's technology for maintaining a decent standard of living for 7+ billion people. In order to do anything we all need energy. Net energy flux through the system has flatlined. Despite all your paper promises, the real energy and physical assets to deliver on your paper promises simply are not there. BTW, what eCONomic graduate school are you currently attending? You sound like the MBA I hired to manage our accounts in 2001. Even he has changed his tune.
I still can't figure out what exactly he's suggesting.
me neither. Details matter. Are these tech giants going to start selling fusion reactors to companies and people? If so, then he would be correct. Details fucking matter.
Honestly, the vast majority of those 7 billion live in abject poverty.
We only need those living in Westernized societies to catch up.
Print on Gentle Ben, print on.
Correct, humanity is a ponzi and the moral hazard is the only underlying structural problem that needs to be dealt with. hedge accordingly.
Psychology 101> Put yourself in the shoes of the guy sitting on a massive stockpile of cash, if Fed can manipulate inflation expectations (Fisher Yesterday, printing press gun pointed on your head.... hummm... Have you been in teh army? I have .....
No customer no earnings. Things are not linear, they are utterly circular. No earnings no customer is also true. People are used to think that the flow is from circulation into monied capital always....(leveraging out from consumers and out of gov both getting poorer into corporations and the Rich getting richer). That is why people can not understand deleveraging. There are period when the flow is from monied capital into circulation, you just have to force that. Keynes is right except that it does not apply to the Government always, and govs have taken a license to spend regardless of the cycle. It applies to the poker table with the consumer and the government and the capital onwers (those three guys). Who ever has accumulated all the chips must be forced to spare some chips back to the losers otherwise there is no game to play anymore (hyperinflation). The chips owners in Japan are the consumers (massive savings), the Government has gotten poorer by sending chips to the corporations but did not manage to get the consumer to dishoard his chips, in the US it is the corporations, in 1929 it is the government with capital owners broke and consumers ok. Economy is a Zero sum game except for technology improvement, it is a greater s fool game, you just have to figure out who is the patsy. And the pasty is not anymore the consumer in hte US (that does not mean they will spend, quite the opposite), the Fed is not pointing the gun on them.
I love pushback. 11 years in business no down year is my background.
NOTE> DId I make a statement about energy being plenty? I actually agree with you, but your point is off the topic. I am not sure there are some solutions, but there is massive waste of energy, there are promissing technologies, but we will probably have a XVII century situation and hopefully not a XIV century situation.
Earnings are a ponzi scheme my dear,
Here what a XIX century economist, wrote.
Dr Adam Smith, in the passage which ]...[ have before quoted from him observes: ‘The Value of the goods circulated between the different dealers never can exceed the value of those circulated between the dealers and the consumers; whatever is bought by the dealers being ultimately destined to be sold to the consumers.’”
Earnings have been manipulated by leveraging up the circulation (daily transactions containing quite a bit of consumption in today s parlance).
So you have corporation earnings on a utter maximum ponzi. Up to 2007, perfect world for capital owners, you managed to get the consumption up, while repressing wages by offshoring jobs in China while China was repressing their own wages and repressing their own consumption. 2007 Kaboum, ponzi game is up, the financial assets levered on consumption are first saved by removing teh deflation threat through printing 1933-1937 style and then utlimately fucked by a move backwards from monied capital into circulation. Check the inflation numbers between 1937 and 1941, even before war it was not getting pretty, while commodities when absolutely ballistic from 1933 (printing) until 1950 and the long bond had a huge bear market starting already by the end 30s.
Today s capital owners fucked in the ass, that is why many of them start to be ambivalent about the Fed being their friend, they sense it without really knowing why yet.
Federal Reserve policies favor the rich the rest of you can go screw yourself as far as ben is concerned
They didn't build that wall.
China is storing corn via their 45% of GDP going into capital formation while the U.S. is being happy go lucky grass hoppers living it up on food stamps with money from our magic money tree. US capital formation has tanked to about 14% of GDP.. disintigration bitchez.
No kidding - China has real problems, to be sure, but it's the US that is in full on denial and has the most to lose. The US produces and exports the least of value while consuming the most and is at the heart of the FIRE cancer that is overwhelming the world. The outperformance of its stock market just shows what a sick joke finance is these days.
"The US produces and exports the least of value"
Not to defend the US economic system, but I have to disagree here.
When the entire "value" system is upside down it's pretty hard to talk about what is considered of value today.
I would argue that the food that is exported is worth more than a bunch of tech crap that's going to die on the vine (when people pick food over it).
In a normal world I would short the S&P and go long ths shanghai composite....in a normal world.
Do you have directions to that normal world place? The Mrs. and I have been discussing a vacation lately..
The new normal has now become the bizarro. Enjoy your vacation.
Exactly what Jeff Gundlach says over at DoubleLine: Short the S&P and go long Shanghai (or just buy China Mobile as it tracks the Shanghai very closely.) With Chanos and Cramer banging the table to sell China, you may as well buy.
Hm... speaking of...
Gundlach’s Residence Burglarized as Thieves Take Porschehttp://www.bloomberg.com/news/2012-09-20/gundlach-s-residence-burglarize...
It's funny China is buying USA bonds...which funds the pent*gon....which in turn is pressuring Japan to pressure China via the Domino Islands.
So China is basically paying for Japan's provocation re: those islands.
It's one big circle.
Is China still buying bonds....I thought they were investing in Tradition.
"It's one big circle."
Its one big circle JERK. Fixed it for ya
China isn't buying many US bonds any more. The FED is buying US bonds and China is buying gold.
TPTB thrive/exist via confusion.
“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.” -- H.L. Mencken
China is buying bonds, sure. But those bonds are backing asset purchases and trade agreements denominated in USD. When the USD crashes and the third parties get shafted with worthless paper, it won't be China that they decide to hate.
Remember, sugar daddies like to dip in your sauce
Go Figure~population[2011]:
China ... 1.35 bn
India ... 1.25 bn
USssA ... 312 ml
...and the answer Alex- China is a friendly neighbor of India and will gladly supply all necessary infrastructure,... while India will gratuitously enhance China's burgeoning coffers!
thankyou Alex,.. again for your yin and yang discourse regarding the eternal-loop of symbiotic prosperity?
your welcome
That's why India is moving all those tanks to the border? To help guard their friendly relationship?
China and India are doing the same thing. Supplying cheap labor to the rest of the world. They don't compliment each other. They compete against each other head to head.
India has no infrastructure and a government that is more corrupt than even the worst officials in China. No mass desire to develop it either. Doomed to be the call center of the world.... in a world where the service industry is falling apart and being exposed as the fraud it is.
Luridcrous how the stock market of the fastest growing economy is going down while stock markets in countires that have hardly any growth and a ton of debt thrive. Not fishy at all...