Monday, August 30, 2010

You Know You Are In Trouble When Supersizing A Backup Rescue Facility By Half A Trillion $ Isn´t Enough 4 Month After The Introduction....IMF Version

In April i wrote at the beginning of the Greece / € Crisis
No wonder the IMF has just SuperzisedTheir "Backup Rescue Facility" By Half A Trillion ( no typo ) for "Contribution To Global Financial Stability"......
Im April im Angesicht der Griechenland und € Krise schrieb ich
Kein Wunder das "vorsorglich" der IMF die Mittel zur "Stabilisierung" der Sorgenkinder mal eben still und heimlich auf 500 Mrd $ verzehnfacht hat ( kein Tipfehler )....
Fast forward to August...... I´m not sure how credible the 1 trillion $ number is but the fact that the IMF is implementing / modifying another credit facility on top of all the existing ones does at least raise eyebrows..... Looks like even "Shock & Awe" isn´t able to stop the flooding.....

Hat ja immerhin einige Monate gereicht...... Ich habe keine Ahnung wie "belastbar" die genannte Summe von 1 Billion $ für die neuen "Rettungsschirme ist....Wenn man aber bedenkt das bereits wenige Monate nach dem letzten Programm bereits wieder Bedarf an neuen Rettungsschirmen besteht muß man befürchten das besonders im Hinblick auf die Zukunft diese Summe nicht zu hoch gegriffen ist....Schon erstaunlich das selbst diese "aberwitzigen Summen" anscheinend nicht mehr ausreichen zumindest mittelfristig die ständig größer werdenden Problemzonen zu überdecken.....

IMF Changes, Expands Crisis-Prevention Credit Lines Bloomberg
Talks are ongoing with member countries to raise the IMF lending capacity to $1 trillion as part of G-20 discussions.

John Lipsky, IMF first deputy managing director, told reporters on a conference call today that the institution has enough money to fund the new credit lines. At the same time, he said he is confident that member countries will continue to demonstrate a commitment for the IMF to have the resources to make the new credit lines “credible and usable.”
IMF Eliminates Borrowing Cap On Rescue Facility In Anticipation Of Europe Crisis 2.0; US Prepares To Print Fresh Trillions In "Rescue" Linen ZH

today the IMF announced it "expanded and enhanced its lending tools to help contain the occurrence of financial crises." As a result, the IMF has as of today extended the duration of its existing Flexible Credit Line (FCL) to two years, concurrently removing the borrowing cap on this facility, which previously stood at 1000 percent of a member’s IMF quota, in essence making the FCL a limitless credit facility, to be used to rescue whomever, at the sole discretion of the IMF's overlords.

Additionally, as the FCL has some make believe acceptance criteria (and with countries such as Poland, Columbia, and Mexico having had access to it, these must certainly be sky high), the IMF is introducing a brand new credit facility, the Precautionary Credit Line (PCL), which will be geared for members with "sound policies [which just happen to need an unlimited source of rescue funding] who nevertheless may not meet the FCL’s high qualification requirements." In other words everyone.

Lastly, for those lazy readers who always scroll to the very bottom looking for a video clip summarizing all previously said, you are in luck. Here is the IMF's Reza Moghadam condescending, and blatantly lying to all who care, as to what the purpose of tonight's "Crisis Prevention Toolkit" expansion is.

IMF Expands Loan Options to Developing Countries WSJ
WASHINGTON—The International Monetary Fund said Monday it would broaden the kinds of loans it offers to encourage a large swath of developing countries to get financial help before they are engulfed in crisis.

Under a new "precautionary credit line," the IMF said it would lend a substantial amount of money to countries whose policies it generally endorses, before those nations run into trouble. The loan would operate like a line of credit, so a country wouldn't have to use the money, and rack up interest charges, unless it needed the financing.

The program would offer loans of as much as five times a country's quota, meaning its financial stake in the IMF, with the possibility of doubling that after a year. Indonesia, for instance, has a $3.1 billion quota, so it could be eligible for a credit line of up to $31 billion. ....

The IMF is working on yet another new loan, the "global stabilization mechanism," which would be available for groups of countries, as a way to overcome the stigma of borrowing from the IMF. The IMF is even considering approving countries for such loans without them having to apply for the money.

Among issues still being debated is whether to simply allow existing credit lines to be more broadly deployed or come up with a new facility that would provide short-term liquidity, he said.

The IMF devises a new way to lend to vulnerable countries before they suffer from financial crises Economist

IMF Sees G7 Net Debt At 200% Of GDP By 2030; 441% By 2050 ZH

Got GOLD ? ;-)

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Monday, August 23, 2010

Quotes Edward Hugh, John Hussman & Andy Xie

I´m taking a quick break from my "Time-Out".... With "QE 2.0 & 3.0" just around the corner & the € crises off the front pages i think the links are not "unimportant".......

Verabscheide mich nach diesen Posting wieder in die angekündigte "Auszeit".... Im Zusammenhang mit der bevorstehenden "QE Version 2.0, 3.0 usw...." sowie der "fast vergessenen" € Krise erscheinen mir die kompletten Links besonders lesenwert....

Edward Hugh
Spain’s debt for 2010 according to the EDP is expected to reach around 77% of GDP (EU Commission spring forecast), and while we feel it is still possible to agree with the IMF when they say that that “Spain’s (public) debt ratio is low compared with many other countries in Europe”, it is only possible to do so if we do not forget that if we add in the 6% that is held by the Social Security Fund, the 7% that has built up in Accounts Payable and the 5% owed by Spains Public Corporations, we end up with a total of something like 95% debt to GDP, which is, of course, above the average. And this is not to even begin to count all those impending pension liabilities.
John Hussman

My impression is that Ben Bernanke has little sense of the damage he is about to provoke. A central banker who talks about throwing money from helicopters is not only arrogant but foolish.

Nearly a century ago, the great economist Ludwig von Mises observed that massive central bank easing is invariably a form of cowardice that attempts to avoid the need to restructure debt or correct fiscal deficits, avoiding wiser but more difficult choices by instead destroying the value of the currency.

Andy Xie

When the Fed or the European Central Bank tries to stimulate, they are actually stimulating the global economy as a whole. Water, no matter where it comes from, flows downwards. Stimulus, similarly, flows to where costs are low and banking systems are healthy.

If you believe this logic, the actions of the Fed and the ECB fuel inflation and asset bubbles in emerging economies rather than stimulate growth at home.

Lots of damage has already been done...... Regarding "healthy" banking systems China has nothing to worry about... ;-)

Denke das wir bereits heute mehr als genügend Auswirkungen dieser Erkenntnis sehen können.....Immerhin hat China in Sachen "gesunden" Bankensystem nichts zu befürchten.... ;-)

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Saturday, August 07, 2010

YouTube Classics....

I´m taking a break.... In the meantime a few of my favourites... Enjoy ;-)

Nehme mir ne Auszeit..... Bis dahin einige meiner Favoriten.....Viel Spaß ;-)

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Thursday, August 05, 2010

China "Bubble" ( Bursting ) Update & Newest Spin "Excluding Tier 1 Cities Everything Is Fine......"

Not only the cracks regarding the Three Gorges Dam are getting more and more obvious on a daily basis...... You can read my earlier takes on China here

Nicht nur der Drei Schluchten Damm zeigt erste Risse...... Mehr von mir zum Thema China gibt es hier

Andy Xie via NC

How many flats in China are sitting empty? The media recently floated a story — denied by power companiesthat 64.5 million urban electricity meters registered zero consumption over a recent, six-month period. That led to a theory that China has enough empty apartments to house 200 million people….

What especially distinguishes China’s property bubble…is an unprecedented amount of living space. This huge stock of empty flats equals the nation’s quantity bubble.

Although the government doesn’t publish vacancy data, I think the vacancy rate for the nation’s private, commercial housing stock is between 25% and 30%. That’s at least double what’s required in a normal market. The gap between what’s needed and what’s available can be viewed as speculative inventory. The value of this inventory held by speculators is probably around 15% of GDP.

It’s being kept on ice, just as copper and other commodities are hoarded in anticipation of rising prices…

Looking at the clip & the TIME photo gallery Ordos, China: A Modern Ghost Town the very high number looks less "hyperbolic"....

Wenn man sich den Clip & die Photoserie von TIME Ordos, China: A Modern Ghost Town ansieht erscheint die extrem hohe Zahl weniger "übertrieben"....

China Tests Said to Check Risk of Cash Crunch Among Developers Bloomberg
China’s stress tests of banks will assess the risk that a possible slump in property prices may strain developers’ finances and cause homebuyers to default, a person with knowledge of the matter said.

The banking regulator told lenders to include worst-case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively

Banks were also told to stress test loans to industries including steel, cement, construction materials and home appliances that are related to housing, the person said

Previous stress tests carried out in the past year assumed home-price declines of as much as 30 percent.
I´ll bet that every (big) bank will pass.....;-) I have to repeat myself Another Reason Why The Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... & that despite almost $60 billion in recent capital increases from the big banks the term "Drop in the bucket" fits perfectly....

Bin mir sicher das keine einzige (wichtige) Bank durchfallen wird.... Verweise hier auf Another Reason Why The Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... Denke das trotz der fast 60 Mrd $ an Kapitalerhöhungen der Banken in jüngster Zeit die Bezeichnung "Tropfen auf den heissen Stein" dürfte passen....

Cracks in the Chinese bubble? FT Alphaville
....the rule of law remains weak in Chinese property overall — 24 out of 30 developers surveyed said they knew of companies that had illegally taken out bank loans to buy land.
Land ministry finds 1,457 unused plots China Daily via FT Alphaville
China's Ministry of Land and Resources has found 1,457 unused plots of land nationwide and given a list of what companies hold rights to these plots to the China Banking Regulatory Commission, the China Securities Journal reported today, citing a person familiar with the situation.

The banking regulator will use the list to conduct a risk assessment, the Beijing-based newspaper reported. About 80 percent of the unused plots may be repossessed by the government, according to the report.

It looks like the latest spin attempt to keep the "story" intact comes along the line "excluding Tier 1 cities everything is fine "..... Where have i heard this bevore.... ? ;-)....

Sieht ganz so aus als wenn die nächste Sau die durchs Dorf getrieben wird um zumindest den Anschein zu erwecken das noch nicht alles verloren ist die Überschrift trägt "Abseits der Tier 1 Städte ist der Immobilienmarkt noch intakt"....... Wo habe ich das bloß vorher schon einmal gehört.... ? ;-)

Standart Chartered FT Alphaville

while the focus is on Tier 1 cities, there is a good chance that they do not represent the national trend.

There are, after all, hundreds of other cities around China that are busy growing, and in which people might be still busy building and selling apartments.

Sales have fallen in Tier 2 and Tier 3 cities too, but not by as much as in Tier 1 cities, as Chart 2 shows [above]. (In our chart, we have used data from 10 cities: Tianjin, Chongqing, Chengdu, Hefei, Wuhan, Changsha, Dalian, Nanjing, Suzhou and Changchun).

Indeed, in some cities – Hangzhou in Zhejiang province, for instance – we have actually seen prices push up a little since April.

This was a Tier 1 bubble and it looks to have been pricked without killing the Tier 2 and Tier 3 markets

China Real Estate Survey


At least they acknowledge that Tier 1 is a bubble.....Take a secound look at the volume stat on page 2...... Crashing is defintely not an overstatement....UPDATE:StanChart: Chinese property correction imminent

Immerhin wird richtigerweise der Tier1 Immobilienmarkt als Bubble identifiziert.....Denke die Volumenangabe auf Seite 2 ist besonders "beeindruckend"..... Der Begriff "Crash" ist sicher nicht als übertrieben einzustufen....UPDATE: StanChart: Chinese property correction imminent


Following the great (stock market) leader — China FT Alphaville

As equity markets should act as a leading indicator of broader economic growth trends, it seems, therefore, that the Chinese equity market has recently become ‘the leading indicator of the leading indicators’. Given that the local Shanghai Composite index and MSCI China have both rebounded by 13-15% from their recent lows and our China strategist, Minggao Shen, has just turned more bullish on the market1, these events are a positive mix for global emerging markets as a whole. This is, therefore, a good time to consider the Chinese market’s role as a signaling mechanism for GEMs as a whole.

China is now a very large economy (the second biggest in the world, accounting for an estimated 9% of global GDP in 2010) and a big stock market (the ninth biggest in the world).

The Chinese economy is also expected to account for as much as 23%10 of global growth (i.e., the rise in global GDP) in 2010, a share that is higher at present due to the weakness of developed economies . . .

China not only now accounts for a significant proportion of global growth in a but it is, by far, the biggest consumer of commodities. Our commodities analyst, Alan Heap11, reports that China currently accounts for the consumption of around 40% of several major metals including copper, nickel, and aluminum . . .

Oh boy.... Wall Street Finest / Shanghai strikes again.... Too bad that he didn´t mention that one reason for the rise in the stock market is probably the stalling real estate market.... With negative real interest rates Chinese have besides GOLD almost no place to put their money to work..... If my view on real estate is correct all his bullish arguments would be turned upside down......

Mal wieder perfektes ( Experten ) Timing..... Wäre nett gewesen wenn zumindest in einem Nebensatz erwähnt worden wäre das einer der Haupttreiber für den Geldfluss in die Aktienmärkte der rapide abkühlenden Immobiliensektor ist....Da die Chinesen mit negativen Realzinsen leben müssen und Abseits von GOLD nur der Aktienmarkt als Alternative übrig bleibt verwundert die gesehene "Stärke" nicht....Sollte ich mit meiner Meinung zum Immobilienmarkt in China auch nur im Ansatz Recht behalten drehen sich die o.a. "bullischen" Argumente über Nacht ins Gegenteil....

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Tuesday, August 03, 2010

China To Open Gold Market, Improve Tax Policies, PBOC Says

Keep in mind that just until a few years ago China had banned the private ownership of GOLD as an investment product.... Watch the clip & i assume the PBoC had to do something to keep the market operating in an orderly fashion....According to the Financial Times Deutschland GOLD in HK is trading already with very large premiums vs the London price....Another main reason could be to establish a stronger "alternative" to the quasi monopolists London & NY....Every bit of new competition for the London & NY exchanges is "appreciated"....

Vor dem Hintergrund das China bis vor einigen Jahren jeglichen privaten Besitz von GOLD im Zusammenhang mit Investments verboten hatte erscheint die Meldung in einem noch vorteilhafteren Licht.... Ich tippe mal, das wenn man sich den nachfolgenden Clip ansieht, die PBoC zumindest teilweise "Getriebener" der Entwicklung ist. Ohne eine weitere Liberalisierung könnte es leicht passieren das ein halbwegs geordneten Markt nicht mehr zu gewährleisten ist.....Wenn man der Financial Times Deutschland Glauben schenken darf wird GOLD in HK bereits jetzt mit einem mehr als happigen Aufschlag vs dem Londoner Kurs gehandelt....Ein weiteres wichtiges Argument dürfte sein eine schlagkräftige Handelsplatzalternative zu installieren....In jedem Fall ist jede zusätzliche Konkurrenz für die Börsen in London & NY mehr als willkommen.....

China to Open Gold Market, Improve Tax Policies, PBOC Says
Aug. 3 (Bloomberg) -- China will continue to open up its gold market and will study how to improve taxation policies for the use of gold for investment purposes, the People’s Bank of China said today.

China will improve foreign-exchange policies related to the gold markets and will allow more commercial banks to export and import the metal, the central bank said in a statement on its website.

The government is also studying allowing foreign suppliers to deliver bullion directly to the Shanghai Gold Exchange, it said.

The total volume of gold traded on the Shanghai Gold Exchange jumped 59 percent in the first six months from a year earlier to the equivalent of 3,174.5 metric tons (102.1 million troy ounces), Song Yuqin, vice general manager at the exchange, said last month.

The Shanghai Gold Exchange has five foreign bank members including the China units of HSBC Holdings Plc and Standard Chartered Plc, according to a statement on the bourse’s website.

Gold demand in China, the world’s second-largest consumer, increased in the first half as government measures to cool the property market and falling equities spurred investment, the exchange said July 7. Spot gold climbed to a record in June as investors sought to protect their wealth amid concerns about the global economic recovery.

“The Chinese central bank is liberalizing the gold market step by step and this is the latest move,” said Ellison Chu, managing director at the precious-metals desk at Standard Bank Asia Ltd. in Hong Kong. “It will allow more foreign participation in China’s growing gold market and it will also help China to be more integrated into the global gold-trading system.”

The central bank also said it would encourage and guide commercial banks to provide yuan-denominated gold derivative trading.

The following presentation monitoring the entire GOLD picture in China is taken from an earlier post In Fiat Money We Do Not Trust "Chinese Edition"

Die nachfolgende Präsentation die umfassend das Thema China & GOLD abhandelt stammt von einem früheren Posting In Fiat Money We Do Not Trust "Chinese Edition"
Gold Report China

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Sunday, August 01, 2010

More Proof That China´s Real Estate Market Is Fueled Mainly Via State & Local Owned Enterprises.....

To get the entire picture you should read China : State & Local Owned Enterprises vs Madoff, Ponzi, Enron...... first..... Just last week i labeled the headline as a little bit "provocative"..... As usual i was too polite... ;-)

Empfehle zur Einführung und um das ganze Ausmaß zu erfassen vorweg China : State & Local Owned Enterprises vs Madoff, Ponzi, Enron...... zu lesen..... Letzte Woche habe ich die Überschrift bewusst noch als eine leichte Übertreibung tituliert.... War wie üblich mal wieder zu höflich.... ;-)

State-Owned Groups Fuel China’s Real Estate Boom NYT
WUHU, China — The Anhui Salt Industry Corporation is a state-owned company that has 11,000 employees, access to government salt mines and a Communist Party boss.

Now it has swaggered into a new line of business: real estate.

The company is developing a complex of luxury high-rises here called Platinum Bay on a parcel it acquired last year by outbidding two other developers to win a local government land auction.

Anhui Salt is hardly alone among big state-owned companies. The China Railway Group is developing residential complexes in Beijing after winning the auction for a huge piece of land there.

Likewise, the China Ordnance Group, a state-led military manufacturer best known for amphibious assault weapons, paid $260 million for Beijing property where it plans to build luxury residences and retail outlets.

And in one of China’s biggest land deals yet, the state-run shipbuilder Sino Ocean paid $1.3 billion last December and March to buy two giant tracts from Beijing’s municipal government to develop residential communities.

All around the nation, giant state-owned oil, chemical, military, telecom and highway groups are bidding up prices on sprawling plots of land for big real estate projects unrelated to their core businesses.

By driving up property prices, the state-owned companies, which are ultimately controlled by the national government, are working at cross-purposes with the central government’s effort to keep China’s real estate boom from becoming a debt-driven speculative bubble — like the one that devastated Western financial markets when it burst two years ago.

Here in Wuhu, a sleepy industrial town about 70 miles west of Nanjing, Anhui Salt is breaking ground on its high-rise project in the center of town — next to a hotel operated by Anhui Conch Holdings.

The land was put up for auction in May 2009, and there were just three bidders — another of which was also a state-owned company. Anhui Salt, which also boasts of operating a steel trading arm, a financing vehicle and even two Honda dealerships, says it is eager to expand beyond industrial products and table salt.

“Platinum Bay is Anhui Salt Industry’s first luxury project and targets the very rich, the very elite class of Wuhu,” said Su Chuanbo, marketing manager.

Asked why Anhui Salt wants to be a developer, Mr. Su said the central government had encouraged state companies to be more profitable, and that real estate was incredibly lucrative.

Add the following story to the mix ........

Das kombiniert mit der nachfolgenden Meldung......

Chinese Manufacturing Weakens in ‘Slowdown, Not a Meltdown’ Bloomberg


China’s July manufacturing data were the weakest in more than a year as the government clamped down on property speculation and investment in polluting and energy- intensive factories.

A purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics showed a contraction. A government-backed PMI slid to 51.2 from 52.1, the Federation of Logistics and Purchasing said yesterday.

The HSBC PMI slid to 49.4, the first reading below 50 in 16 months, from 50.4 in June. Measures of output, orders and export orders all showed contractions. The government PMI, released by the statistics bureau and the logistics federation, showed the weakest expansion in 17 months.

H/T Chart BI

Needless to say that stocks in tandem with commodities surged to a multi month high.....;-)

Überflüssig zu erwähnen das die Aktienmärkte Hand in Hand mit den Rohstoffen diese Nummer mit neuen Mehrmonatshochs abgefeiert haben.... ;-)

HSBC's July China services PMI points to expansion MW

China's service-sector growth accelerated in July, marking the fastest pace of expansion in three months, according to HSBC's Purchasing Managers' Index. The PMI came in at 56.3 in July, up from 55.6 in June, HSBC said in an emailed statement Wednesday. "This improvement in the July service PMI reading, though modest, reflects the resilience of the domestic part of the economy, in particular consumer-related sectors. Combined with the sustained recovery in the labor market, this should cushion the economic slowdown in the coming quarters," The July PMI marks the 20th consecutive month of expansion for the services sector

This "transition" is good in the long term..... Rebalancing is needed....

Immerhin ein Silberstreif am Horizont.... Die Entwicklung des Servicesektors ist dringend notwending um die Ungleichgewichte zumindest auf Lange Sicht halbwegs ins Lot zu bringen....

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