China cuts interest rates again to spur economic growth

[webfact]

China cuts interest rates again to spur economic growth

BEIJING (AP) — China cut interest rates for a fifth time in nine months Tuesday in a new effort to shore up slowing economic growth, and its top economic official tried to dispel fears its yuan might fall further in value.

The benchmark rate for a one-year loan will be cut by 0.25 percentage points to 4.6 percent and the one-year rate for deposits will fall by a similar margin to 1.75 percent, the central bank announced. It also increased the amount of money available for lending by reducing the minimum reserves banks are required to hold by 0.5 percentage points.

The moves had been expected after exports, manufacturing and other economic indicators weakened by larger margins than expected.

Premier Li Keqiang, the country's top economic official, said there was no basis for further declines in the yuan, also known as the renminbi, following its surprise Aug. 11 devaluation.

Economists said the 3 percent decline against the dollar was too small to help Chinese exporters. The central bank said the decline was a one-time event and part of changes meant to make the exchange rate more market-oriented, but it fueled fears of a "currency war" if other government reduced their own exchange rates to keep export prices low.

"There is no basis for continued devaluation of the renminbi exchange rate," Li said during a meeting with a visiting Kazakh official, according to state television. "It can remain stable at a reasonable and balanced level."

Li also tried to dispel anxiety about the cooling economy, saying growth was in a "reasonable range."

Beijing reported economic growth held steady at 7 percent in the latest quarter but that was due to a stock market boom that pushed up the contribution from financial industries while other sectors weakened.

In a statement, the central bank cited "downward pressure" on the economy and said it wanted to lower financing costs for Chinese companies.

The bank also promised to pay close attention to liquidity, or the availability of credit, a possible attempt to ease concern a recent rise in capital outflows from China might leave less money for lending.

Exports in July fell by an unexpectedly large margin of 8.3 percent while a manufacturing survey found activity this month contracted at a faster rate than anticipated.


-- (c) Associated Press 2015-08-26

[Usernames]

Absolute desperation. The government acts like it's one giant company, instead of a nation. They look like Enron. No transparency and the government restricting short selling, restricting all trading in some stocks, putting government money into certain stocks to prop them up, and now this after hours interest rate cut to try and catch people the government thinks is on the wrong side of the trade into a whipsaw to help force exchange prices up. China is one dirty place to do business or invest. There is no "fine tuning" of the economy. It's all oafish, hamfisted overt attempts to manipulate and prop up a lot of companies whose real balance sheet may well be in the negative. Bad deal.

[noitom]

The great Chinese coverup.

[ExpatOilWorker]

Soon we will have a real-estate crash in China and the Chinese Teflon economy gets burned.

Remember how everybody was so impressed and praised the Tiger Economies of South East Asia, pre 1997?

[Loptr]

China has also dumped over $100 billion in UST since the devaluation of the Yuan... This all but precludes a rate hike by the Fed in September as the last thing the US needs is a stronger USD in light of FX collapses in emerging markets...

[IMA_FARANG]

The heart of the problem, which the Chinese government refuses to admit, is that In China there is to much money, liquidity, looking for investment, and no proper place to invest those funds.

That is why China goes through cycles of "fads" .... places to invest money..... such as 'real estate" .... or the stock market.

It's all speculation.... and people simply running to put there money into the latest speculative rumor....then running out of that to follow the next "sure thing".

They are all walking on a minefield.... and that means eventually you will step on a mine.

Edited August 26, 2015 by IMA_FARANG

[NeverSure]

This is a severe liquidity crisis. China is running out of places to turn for money. Unlike western allies China is communist and is responsible for its people. The problems are similar to Russia's in that way. The USSR went belly up under similar circumstances.

I thumb my nose at all of those who have said that China is awash in money, that it's the Next Big Deal^TM, that it would overtake the West, that it was so rich it loaned the US money, that.. Whatever. They were all lies and now it's apparent that the emperor has no clothes.

This is a major crash that's been coming for some time.

China doesn't own much of value. It doesn't have nearly enough natural resources for the size of its population and has to buy energy and food. It provides cheap labor to manufacture things for other people that those other people invented and supervise. The big western companies make the real money from Apple products etc., not China.

Let's see how this plays out.

Cheers.

[Srikcir]

The latest rate cut is not the last economic "adjustment" the CCP will make before 2016.

But some of possible actions China may make to increase national liquidity might indirectly benefit foreign policy of the Western-Pacific nations such as a rollback of military spending.

[thaibeachlovers]

Fiddling while China burns. Having taken all the unskilled jobs from the west, they now find not enough people in the west have enough money to buy what they make and the end result.....................

[Publicus]

There are so many severe problems manifesting that looking at this one interest rate fiddling indicates the breadth and depth of it.

The yuan has remained effectively pegged to the USD so, unlike in Thailand where in 1997 the baht remained disastrously pegged, the CCP Boyz moved off the dime to depreciate. Just as in 1997 Thailand however capital is fleeing China and the depreciation both addresses and confirms it. Money has dried up in the CCP China so this fifth rate reduction so far this year simmultaneously confirms the fact and tries to address it.

The CCP Boyz further reduced the Triple-R ratio yesterday which is what they always do when capital moves out significantly enough. Conversely, the Boyz have always increased the ratio when capital has flowed in significantly. So the current series of reductions further confirms the paucity of money in all of the Boyz systems.

The Boyz can't use their usual plethora of fiscal stimulus mainly because they're grabbing at whatever money they can identify to throw at the crashing stock markets (big Shanghai in the North, smaller Shenzhen in the South). Their authorizing last week of private pension funds to 'invest' up to 30% of their capital value --1 Trillion yuan-- in the dying quail stock markets was a strong plea rather than an order because no one is following blatantly inept and reverse Midas directives any more. So equities markets are continuing their freefall, which means the Boyz original cockamaimied plan to get ordinary middle class people to invest then use equities gains to reduce state corporations' debt is a dead duck.

The Boyz surprise yuan depreciation of just over 3% was going to be a quick-action 10% deterioration but the shock reaction globally has frozen the Boyz in their tracks. So unless the Boyz charge ahead anyway, they aren't going to produce any more still inadequate amounts of yuan in the economy. The US Treasury unreported proposal put over the past weekend to implement QE has only further confused the Boyz because they haven't ever done it and have no clue how to do it in their mangled and uncoordinated systems of economics, finance, gargantuan corruption.

The decline in manufacturing continues to accelerate as does the ongoing decline of exports. Deflation set in earlier this year. The new middle class was already in a tatters due to the bursting of the housing and property bubble when the Boyz undertook their campaign to tell 'em to invest it all in the equities markets instead. Reckless bank lending was ordered to enhance equities purchases and now all the margin calls have added significantly to the existing proliferation of npl bloodclots in the state owned banks, which is all the banks. The shadow banking system is breaking a lot of debitor kneecaps for not much return.

Global markets have been openly asking where Xi Jinping is in all of this as nobody has seen or heard much of anything from him. Fact is the political system is more unstable now than it had been since 1989 due to acute factional hostilities. Two major coup plotters of recent years are behind bars but it has become obvious during recent months Xi didn't get all of 'em.

Edited August 27, 2015 by Publicus

[thaibeachlovers]

There are so many severe problems manifesting that looking at this one interest rate fiddling indicates the breadth and depth of it.

The yuan has remained effectively pegged to the USD so, unlike in Thailand where in 1997 the baht remained disastrously pegged, the CCP Boyz moved off the dime to depreciate. Just as in 1997 Thailand however capital is fleeing China and the depreciation both addresses and confirms it. Money has dried up in the CCP China so this fifth rate reduction so far this year simmultaneously confirms the fact and tries to address it.

The CCP Boyz further reduced the Triple-R ratio yesterday which is what they always do when capital moves out significantly enough. Conversely, the Boyz have always increased the ratio when capital has flowed in significantly. So the current series of reductions further confirms the paucity of money in all of the Boyz systems.

The Boyz can't use their usual plethora of fiscal stimulus mainly because they're grabbing at whatever money they can identify to throw at the crashing stock markets (big Shanghai in the North, smaller Shenzhen in the South). Their authorizing last week of private pension funds to 'invest' up to 30% of their capital value --1 Trillion yuan-- in the dying quail stock markets was a strong plea rather than an order because no one is following blatantly inept and reverse Midas directives any more. So equities markets are continuing their freefall, which means the Boyz original cockamaimied plan to get ordinary middle class people to invest then use equities gains to reduce state corporations' debt is a dead duck.

The Boyz surprise yuan depreciation of just over 3% was going to be a quick-action 10% deterioration but the shock reaction globally has frozen the Boyz in their tracks. So unless the Boyz charge ahead anyway, they aren't going to produce any more still inadequate amounts of yuan in the economy. The US Treasury unreported proposal put over the past weekend to implement QE has only further confused the Boyz because they haven't ever done it and have no clue how to do it in their mangled and uncoordinated systems of economics, finance, gargantuan corruption.

The decline in manufacturing continues to accelerate as does the ongoing decline of exports. Deflation set in earlier this year. The new middle class was already in a tatters due to the bursting of the housing and property bubble when the Boyz undertook their campaign to tell 'em to invest it all in the equities markets instead. Reckless bank lending was ordered to enhance equities purchases and now all the margin calls have added significantly to the existing proliferation of npl bloodclots in the state owned banks, which is all the banks. The shadow banking system is breaking a lot of debitor kneecaps for not much return.

Global markets have been openly asking where Xi Jinping is in all of this as nobody has seen or heard much of anything from him. Fact is the political system is more unstable now than it had been since 1989 due to acute factional hostilities. Two major coup plotters of recent years are behind bars but it has become obvious during recent months Xi didn't get all of 'em.

Assuming you are correct, my question is why do the ordinary people invest in what is basically gambling, and gambling where the stakes are always against the small investor. Are people really that stupid, or is it just that no one told them about the crash of 2007?

[Publicus]

There are so many severe problems manifesting that looking at this one interest rate fiddling indicates the breadth and depth of it.

The yuan has remained effectively pegged to the USD so, unlike in Thailand where in 1997 the baht remained disastrously pegged, the CCP Boyz moved off the dime to depreciate. Just as in 1997 Thailand however capital is fleeing China and the depreciation both addresses and confirms it. Money has dried up in the CCP China so this fifth rate reduction so far this year simmultaneously confirms the fact and tries to address it.

The CCP Boyz further reduced the Triple-R ratio yesterday which is what they always do when capital moves out significantly enough. Conversely, the Boyz have always increased the ratio when capital has flowed in significantly. So the current series of reductions further confirms the paucity of money in all of the Boyz systems.

The Boyz can't use their usual plethora of fiscal stimulus mainly because they're grabbing at whatever money they can identify to throw at the crashing stock markets (big Shanghai in the North, smaller Shenzhen in the South). Their authorizing last week of private pension funds to 'invest' up to 30% of their capital value --1 Trillion yuan-- in the dying quail stock markets was a strong plea rather than an order because no one is following blatantly inept and reverse Midas directives any more. So equities markets are continuing their freefall, which means the Boyz original cockamaimied plan to get ordinary middle class people to invest then use equities gains to reduce state corporations' debt is a dead duck.

The Boyz surprise yuan depreciation of just over 3% was going to be a quick-action 10% deterioration but the shock reaction globally has frozen the Boyz in their tracks. So unless the Boyz charge ahead anyway, they aren't going to produce any more still inadequate amounts of yuan in the economy. The US Treasury unreported proposal put over the past weekend to implement QE has only further confused the Boyz because they haven't ever done it and have no clue how to do it in their mangled and uncoordinated systems of economics, finance, gargantuan corruption.

The decline in manufacturing continues to accelerate as does the ongoing decline of exports. Deflation set in earlier this year. The new middle class was already in a tatters due to the bursting of the housing and property bubble when the Boyz undertook their campaign to tell 'em to invest it all in the equities markets instead. Reckless bank lending was ordered to enhance equities purchases and now all the margin calls have added significantly to the existing proliferation of npl bloodclots in the state owned banks, which is all the banks. The shadow banking system is breaking a lot of debitor kneecaps for not much return.

Global markets have been openly asking where Xi Jinping is in all of this as nobody has seen or heard much of anything from him. Fact is the political system is more unstable now than it had been since 1989 due to acute factional hostilities. Two major coup plotters of recent years are behind bars but it has become obvious during recent months Xi didn't get all of 'em.

Assuming you are correct, my question is why do the ordinary people invest in what is basically gambling, and gambling where the stakes are always against the small investor. Are people really that stupid, or is it just that no one told them about the crash of 2007?

Everyone in the CCP China in 2008 was informed of the crash in the USA and they have been taught about it in the schools since, to include being reminded in special (documentary) programs on the party/government's 44 channel Central China Television. The US subprime etc crash was presented by the CCP Boyz in Beijing as proof positive of their predictions the USA was fading, collapsing, in decline and was soon to be overtaken by the CCP China roaring on forward and upward. A lot of people around the world bought that bill of goods.

Now all of that has exploded as myth and bluster from the CCP which everyone anyway knows is grotesquely corrupt. Now everyone over there knows and shakes their head that the CCP Boyz are grossly incompetent and have been inept all along. This has become clear as bubble after bubble has formed and begun to burst, as the banks have no money, as Chinese capitalists lose their Western business partners who with their capital dash to the airports, as the banks have no money, as property values plummet etc etc. The proverbial last straw was the stock market, in which people followed the Boyz nationally promoted campaign to buy stocks and to borrow money to buy stocks.

I'm in contact with CCP Chinese I met while I lived and worked there who have told me personal individual horror stories about the stock market investment promotion campaign by the Boyz and the crash. It seems to occur in three groupings, those who lost yuan 500,000 plus or minus some, those who lost yuan 100,000 plus/minus a couple of yuan; the mass of the middle class that typically lost in the neighborhood of 60,000. A lot of people lost their savings and they now realize they're not going to get it back. All of my Chinese former colleagues and enduring Chinese friends state strongly that the new middle class not only knows it's been losing ground radically since early last year, and a significant amount of ground literally in property and housing, they know they're being abused and tossed about by the party/government.

Information is tightly controlled and indoctrination is the strict rule in all the schools and on television. Consequently the CCP Chinese have no clue of the risks as demonstrated by the 1997 Asia crisis, or of the recovery of the US economy, of Greece except that Greece is a democracy so as the CCP Boyz say, that's the reason Greeks are in so much trouble; that Russia is being abused by Washington and that the United States wants all of the world and everything in it, and wants it now. The CCP Chinese don't know anything except what they're told.

A number of 'em do know more through exposure to Westerns in the CCP China whether we're in education or business or whatever. This is so despite the CCP's cardinal rule that a Chinese must never believe a (foreign) devil, never ever and not for any reason believe what a devil says. We don't have Chinese blood so therefore we can't be trusted. There are others, in the South in particular where people have lots of experience with Western devils, who actively seek out information from outside of the CCP China, using a VPN that zings right through the Great Firewall of China to access the www.

There are Chinese people in Beijing who are highly sophisticated against their party/government because they've had to learn fast and well about the most sophisticated party gimmicks, government lies, distractions, bag of tricks and the like. Beijing is so polluted that a darkness at noon is common while many people in the metro area have learned to see clearly through the CCP and its empty environmental promises.

But the mass of the CCP Chinese people have only the lifetime of indoctrination the party gives 'em. So they went for the stock market scam and they went all in. No more however, as the mass of the CCP Chinese now recognize the Boyz in Beijing and in the provincial and local capitals have no more crisis-killer hats with rabbits in 'em. That ongoing crises going forward indefinitely is the new normal. It is not going to be pretty.

[NeverSure]

There are so many severe problems manifesting that looking at this one interest rate fiddling indicates the breadth and depth of it.

The yuan has remained effectively pegged to the USD so, unlike in Thailand where in 1997 the baht remained disastrously pegged, the CCP Boyz moved off the dime to depreciate. Just as in 1997 Thailand however capital is fleeing China and the depreciation both addresses and confirms it. Money has dried up in the CCP China so this fifth rate reduction so far this year simmultaneously confirms the fact and tries to address it.

The CCP Boyz further reduced the Triple-R ratio yesterday which is what they always do when capital moves out significantly enough. Conversely, the Boyz have always increased the ratio when capital has flowed in significantly. So the current series of reductions further confirms the paucity of money in all of the Boyz systems.

The Boyz can't use their usual plethora of fiscal stimulus mainly because they're grabbing at whatever money they can identify to throw at the crashing stock markets (big Shanghai in the North, smaller Shenzhen in the South). Their authorizing last week of private pension funds to 'invest' up to 30% of their capital value --1 Trillion yuan-- in the dying quail stock markets was a strong plea rather than an order because no one is following blatantly inept and reverse Midas directives any more. So equities markets are continuing their freefall, which means the Boyz original cockamaimied plan to get ordinary middle class people to invest then use equities gains to reduce state corporations' debt is a dead duck.

The Boyz surprise yuan depreciation of just over 3% was going to be a quick-action 10% deterioration but the shock reaction globally has frozen the Boyz in their tracks. So unless the Boyz charge ahead anyway, they aren't going to produce any more still inadequate amounts of yuan in the economy. The US Treasury unreported proposal put over the past weekend to implement QE has only further confused the Boyz because they haven't ever done it and have no clue how to do it in their mangled and uncoordinated systems of economics, finance, gargantuan corruption.

The decline in manufacturing continues to accelerate as does the ongoing decline of exports. Deflation set in earlier this year. The new middle class was already in a tatters due to the bursting of the housing and property bubble when the Boyz undertook their campaign to tell 'em to invest it all in the equities markets instead. Reckless bank lending was ordered to enhance equities purchases and now all the margin calls have added significantly to the existing proliferation of npl bloodclots in the state owned banks, which is all the banks. The shadow banking system is breaking a lot of debitor kneecaps for not much return.

Global markets have been openly asking where Xi Jinping is in all of this as nobody has seen or heard much of anything from him. Fact is the political system is more unstable now than it had been since 1989 due to acute factional hostilities. Two major coup plotters of recent years are behind bars but it has become obvious during recent months Xi didn't get all of 'em.

Assuming you are correct, my question is why do the ordinary people invest in what is basically gambling, and gambling where the stakes are always against the small investor. Are people really that stupid, or is it just that no one told them about the crash of 2007?

Everyone in the CCP China in 2008 was informed of the crash in the USA and they have been taught about it in the schools since, to include being reminded in special (documentary) programs on the party/government's 44 channel Central China Television. The US subprime etc crash was presented by the CCP Boyz in Beijing as proof positive of their predictions the USA was fading, collapsing, in decline and was soon to be overtaken by the CCP China roaring on forward and upward. A lot of people around the world bought that bill of goods.

Now all of that has exploded as myth and bluster from the CCP which everyone anyway knows is grotesquely corrupt. Now everyone over there knows and shakes their head that the CCP Boyz are grossly incompetent and have been inept all along. This has become clear as bubble after bubble has formed and begun to burst, as the banks have no money, as Chinese capitalists lose their Western business partners who with their capital dash to the airports, as the banks have no money, as property values plummet etc etc. The proverbial last straw was the stock market, in which people followed the Boyz nationally promoted campaign to buy stocks and to borrow money to buy stocks.

I'm in contact with CCP Chinese I met while I lived and worked there who have told me personal individual horror stories about the stock market investment promotion campaign by the Boyz and the crash. It seems to occur in three groupings, those who lost yuan 500,000 plus or minus some, those who lost yuan 100,000 plus/minus a couple of yuan; the mass of the middle class that typically lost in the neighborhood of 60,000. A lot of people lost their savings and they now realize they're not going to get it back. All of my Chinese former colleagues and enduring Chinese friends state strongly that the new middle class not only knows it's been losing ground radically since early last year, and a significant amount of ground literally in property and housing, they know they're being abused and tossed about by the party/government.

Information is tightly controlled and indoctrination is the strict rule in all the schools and on television. Consequently the CCP Chinese have no clue of the risks as demonstrated by the 1997 Asia crisis, or of the recovery of the US economy, of Greece except that Greece is a democracy so as the CCP Boyz say, that's the reason Greeks are in so much trouble; that Russia is being abused by Washington and that the United States wants all of the world and everything in it, and wants it now. The CCP Chinese don't know anything except what they're told.

A number of 'em do know more through exposure to Westerns in the CCP China whether we're in education or business or whatever. This is so despite the CCP's cardinal rule that a Chinese must never believe a (foreign) devil, never ever and not for any reason believe what a devil says. We don't have Chinese blood so therefore we can't be trusted. There are others, in the South in particular where people have lots of experience with Western devils, who actively seek out information from outside of the CCP China, using a VPN that zings right through the Great Firewall of China to access the www.

There are Chinese people in Beijing who are highly sophisticated against their party/government because they've had to learn fast and well about the most sophisticated party gimmicks, government lies, distractions, bag of tricks and the like. Beijing is so polluted that a darkness at noon is common while many people in the metro area have learned to see clearly through the CCP and its empty environmental promises.

But the mass of the CCP Chinese people have only the lifetime of indoctrination the party gives 'em. So they went for the stock market scam and they went all in. No more however, as the mass of the CCP Chinese now recognize the Boyz in Beijing and in the provincial and local capitals have no more crisis-killer hats with rabbits in 'em. That ongoing crises going forward indefinitely is the new normal. It is not going to be pretty.

^^^ This is really good stuff and it's exactly the way it is.

The masses in China have not before had the opportunity to invest in markets including stocks and real estate. That doesn't match the communist ideal. They are have been therefore very unsophisticated. As said above, the party line is the only truth.

China not only began to allow its people to invest in the market but restricted certain classes and even companies to only the Chinese investors. After a number of years of growth and expansion the Chinese began to believe that the markets only go up. This has happened in the West too of course but the Chinese, believing that China was the new superpower and invincible into the future bought with reckless abandon and no regard for any fundamentals. The markets were simply the sure fire way to get rich into apparent infinity.

I apologize for naming names but Publicus and I have both been predicting an imminent China crash for some time now on here. It's just too obvious that the emperor has no clothes regardless of the bluster.

Many people have asked me "How is the US going to control China in the S. China Sea exploits etc. now that it's so powerful?" I just LOL and wait for that other shoe.

I've said this before but China doesn't really own much. It is the West's Beotch^TM, providing cheap labor to manufacture things invented in the West using techniques and equipment from the West and materials from the West and even supervision from the West.

China simply ain't all that and it's in a severe liquidity crises among other problems.

Cheers.

[ABCer]

This is a severe liquidity crisis. China is running out of places to turn for money. Unlike western allies China is communist and is responsible for its people. The problems are similar to Russia's in that way. The USSR went belly up under similar circumstances.

I thumb my nose at all of those who have said that China is awash in money, that it's the Next Big Deal^TM, that it would overtake the West, that it was so rich it loaned the US money, that.. Whatever. They were all lies and now it's apparent that the emperor has no clothes.

This is a major crash that's been coming for some time.

China doesn't own much of value. It doesn't have nearly enough natural resources for the size of its population and has to buy energy and food. It provides cheap labor to manufacture things for other people that those other people invented and supervise. The big western companies make the real money from Apple products etc., not China.

Let's see how this plays out.

Cheers.

NS,

Usually I agree with most of your opinions.

Not this one.

- liquidity crisis - could very well be something else?

- running out of places to turn for money - doesn't go well with China's owning a big chunk of US funds in different forms;

- being Communist - doesn't go well with being responsible for its people - actually opposite to USSR;

- any comparison of Chinese economy to Russian economy can be described in 'anti'- terms only;

- USSR went belly up because its economy didn't produce enough to support people alive plus military plus elite;

- Chinese compete with any other country on almost equal terms except RND - and even this is only temporary;

- dropping interest rate 0.25% off 4.6% is hardly noticeable compared to US going rates - yet nobody points at US falling apart yet ( except Russians); a major crash it is not!;

- you're absolutely right - China has no adequate natural resources for its economy and yes, West is making bulk profit on its products - but be not so rigid about the fact:

look at what they have achieved in the last 30 years compared with Russia!

There are only two countries I take my hat off to - these are China and Israel, or to be fair - Israel and China.

NOTE: Communist ideas I reject any time at any place and in any form.

Edited August 28, 2015 by ABCer

[thaibeachlovers]

Tony Abbot must be having nightmares now.

I feel for him, as he only just got into power and now forces beyond his control are going to ruin it for him. Be interesting to see if Labour makes expensive promises next election, given that the bank will be broke.

[Publicus]

To pick up on and clarify someone's foggy point, everything the CCP China is and has been since 1949 comes from the Chinese Communist Party. Mao demolished Confucius during the Cultural Revolution. The only reason the CCP Chinese continue to live in the ways Confucius scribed is because the ways preceded him and Confucius only codified them, apparently for eternity.

And here is the current handiwork of the CCP as described by Salvatore Babones, from his timely analysis China Hits A Wall, and who refers to the demographic ageing of the population which already does not have enough young workers, and to the fact Beijing gets 5% of its revenue from its (invisible) progressive personal income tax that applies to almost no one.

It is often said that China will get old before it gets rich; it is perhaps equally true that the Chinese economy will get liberalized before it gets taxed. Liberalization without taxation will push the Chinese government into the familiar Third World pattern of perpetual fiscal crisis. A Chinese state that raises money primarily through regressive taxes and struggles to meet its welfare obligations will look a lot like the rest of the Third World that China supposedly left behind years ago. A declining yuan is only a prelude to this kind of crisis, not a final act.

https://www.foreignaffairs.com/articles/china/2015-08-16/china-hits-wall

[Harsh Jones]

There are so many severe problems manifesting that looking at this one interest rate fiddling indicates the breadth and depth of it.

The yuan has remained effectively pegged to the USD so, unlike in Thailand where in 1997 the baht remained disastrously pegged, the CCP Boyz moved off the dime to depreciate. Just as in 1997 Thailand however capital is fleeing China and the depreciation both addresses and confirms it. Money has dried up in the CCP China so this fifth rate reduction so far this year simmultaneously confirms the fact and tries to address it.

The CCP Boyz further reduced the Triple-R ratio yesterday which is what they always do when capital moves out significantly enough. Conversely, the Boyz have always increased the ratio when capital has flowed in significantly. So the current series of reductions further confirms the paucity of money in all of the Boyz systems.

The Boyz can't use their usual plethora of fiscal stimulus mainly because they're grabbing at whatever money they can identify to throw at the crashing stock markets (big Shanghai in the North, smaller Shenzhen in the South). Their authorizing last week of private pension funds to 'invest' up to 30% of their capital value --1 Trillion yuan-- in the dying quail stock markets was a strong plea rather than an order because no one is following blatantly inept and reverse Midas directives any more. So equities markets are continuing their freefall, which means the Boyz original cockamaimied plan to get ordinary middle class people to invest then use equities gains to reduce state corporations' debt is a dead duck.

The Boyz surprise yuan depreciation of just over 3% was going to be a quick-action 10% deterioration but the shock reaction globally has frozen the Boyz in their tracks. So unless the Boyz charge ahead anyway, they aren't going to produce any more still inadequate amounts of yuan in the economy. The US Treasury unreported proposal put over the past weekend to implement QE has only further confused the Boyz because they haven't ever done it and have no clue how to do it in their mangled and uncoordinated systems of economics, finance, gargantuan corruption.

The decline in manufacturing continues to accelerate as does the ongoing decline of exports. Deflation set in earlier this year. The new middle class was already in a tatters due to the bursting of the housing and property bubble when the Boyz undertook their campaign to tell 'em to invest it all in the equities markets instead. Reckless bank lending was ordered to enhance equities purchases and now all the margin calls have added significantly to the existing proliferation of npl bloodclots in the state owned banks, which is all the banks. The shadow banking system is breaking a lot of debitor kneecaps for not much return.

Global markets have been openly asking where Xi Jinping is in all of this as nobody has seen or heard much of anything from him. Fact is the political system is more unstable now than it had been since 1989 due to acute factional hostilities. Two major coup plotters of recent years are behind bars but it has become obvious during recent months Xi didn't get all of 'em.

So the US's biggest legitimate creditor is in financial trouble ?That doesn't bode so well for the US. The more capital flight in China, means more selling of China's stock of US debt. The more selling of dollar debt means dollars will start to flood the forex markets. Which will lead to an uptick in dollar velocity and inflation.

In short, the more trouble China is in, the more trouble the US will find itself in

[Harsh Jones]

China has also dumped over $100 billion in UST since the devaluation of the Yuan... This all but precludes a rate hike by the Fed in September as the last thing the US needs is a stronger USD in light of FX collapses in emerging markets...

So what makes you believe the Fed this time ? They said rates would rise in March of this year. Then June. And they've been doing this since 2010 and people like you keep falling for it.

[Publicus]

There are so many severe problems manifesting that looking at this one interest rate fiddling indicates the breadth and depth of it.

The yuan has remained effectively pegged to the USD so, unlike in Thailand where in 1997 the baht remained disastrously pegged, the CCP Boyz moved off the dime to depreciate. Just as in 1997 Thailand however capital is fleeing China and the depreciation both addresses and confirms it. Money has dried up in the CCP China so this fifth rate reduction so far this year simmultaneously confirms the fact and tries to address it.

The CCP Boyz further reduced the Triple-R ratio yesterday which is what they always do when capital moves out significantly enough. Conversely, the Boyz have always increased the ratio when capital has flowed in significantly. So the current series of reductions further confirms the paucity of money in all of the Boyz systems.

The Boyz can't use their usual plethora of fiscal stimulus mainly because they're grabbing at whatever money they can identify to throw at the crashing stock markets (big Shanghai in the North, smaller Shenzhen in the South). Their authorizing last week of private pension funds to 'invest' up to 30% of their capital value --1 Trillion yuan-- in the dying quail stock markets was a strong plea rather than an order because no one is following blatantly inept and reverse Midas directives any more. So equities markets are continuing their freefall, which means the Boyz original cockamaimied plan to get ordinary middle class people to invest then use equities gains to reduce state corporations' debt is a dead duck.

The Boyz surprise yuan depreciation of just over 3% was going to be a quick-action 10% deterioration but the shock reaction globally has frozen the Boyz in their tracks. So unless the Boyz charge ahead anyway, they aren't going to produce any more still inadequate amounts of yuan in the economy. The US Treasury unreported proposal put over the past weekend to implement QE has only further confused the Boyz because they haven't ever done it and have no clue how to do it in their mangled and uncoordinated systems of economics, finance, gargantuan corruption.

The decline in manufacturing continues to accelerate as does the ongoing decline of exports. Deflation set in earlier this year. The new middle class was already in a tatters due to the bursting of the housing and property bubble when the Boyz undertook their campaign to tell 'em to invest it all in the equities markets instead. Reckless bank lending was ordered to enhance equities purchases and now all the margin calls have added significantly to the existing proliferation of npl bloodclots in the state owned banks, which is all the banks. The shadow banking system is breaking a lot of debitor kneecaps for not much return.

Global markets have been openly asking where Xi Jinping is in all of this as nobody has seen or heard much of anything from him. Fact is the political system is more unstable now than it had been since 1989 due to acute factional hostilities. Two major coup plotters of recent years are behind bars but it has become obvious during recent months Xi didn't get all of 'em.

So the US's biggest legitimate creditor is in financial trouble ?That doesn't bode so well for the US. The more capital flight in China, means more selling of China's stock of US debt. The more selling of dollar debt means dollars will start to flood the forex markets. Which will lead to an uptick in dollar velocity and inflation.

In short, the more trouble China is in, the more trouble the US will find itself in

The global corporate debt that is denominated in $9 Trillion USD provides a notion of the strength, breadth, resiliency as may be needed of the USD as the global medium of trade and as the global reserve currency.

The Boyz in Beijing meanwhile are raising the probability to global markets that they're going to expend their forex reserves of almost $4 Trillion USD value during the next 12-24 months. The CCP Boyz hold only $1.1 Trillion of actual USD obligations due them. The US Treasury will manage any CCP China bankruptcy successfully even without an executive order by POTUS freezing US Treasuries held by the CCP Boyz. A freeze by POTUS of US financials held by the CCP Boyz just won't be necessary.

The Fed is meanwhile trying to get inflation up to 2% so an assist by the unawares CCP Boyz might not be unappreciated. A concomitant dollar velocity if it occurs is not necessarily bad.

Beyond strictly US interests, if the Fed does reduce rates in September anyway, as many market makers are advocating yesterday and today, the yuan will further depreciate without any action necessary by the Boyz, and the less the bumbling Boyz do in all of this the better. A major reason for the 3% yuan depreciation earlier this month was to somewhat counter the staggering capital flight of $530 billion the past five quarters and another $400 billion in July and August. Add to this the $1 Trillion of Chinese capital that has in recent years left through underground portals with numerous families and there isn't much doubt the yuan is virtually worthless, so what's to worry.

There's not much more trouble that the CCP Boyz can get in to because they're maxing out more than enough disasters now. Of course the huge crashing in the CCP China is not over by a long shot as there's much much more to cascade down on them continuing in to next year. The Boyz simply have far far too many balls in the air for them to juggle everything any more or at all. Look for the CCP Boyz new five-year plan to come from the Fed.

[Harsh Jones]

There are so many severe problems manifesting that looking at this one interest rate fiddling indicates the breadth and depth of it.

The yuan has remained effectively pegged to the USD so, unlike in Thailand where in 1997 the baht remained disastrously pegged, the CCP Boyz moved off the dime to depreciate. Just as in 1997 Thailand however capital is fleeing China and the depreciation both addresses and confirms it. Money has dried up in the CCP China so this fifth rate reduction so far this year simmultaneously confirms the fact and tries to address it.

The CCP Boyz further reduced the Triple-R ratio yesterday which is what they always do when capital moves out significantly enough. Conversely, the Boyz have always increased the ratio when capital has flowed in significantly. So the current series of reductions further confirms the paucity of money in all of the Boyz systems.

The Boyz can't use their usual plethora of fiscal stimulus mainly because they're grabbing at whatever money they can identify to throw at the crashing stock markets (big Shanghai in the North, smaller Shenzhen in the South). Their authorizing last week of private pension funds to 'invest' up to 30% of their capital value --1 Trillion yuan-- in the dying quail stock markets was a strong plea rather than an order because no one is following blatantly inept and reverse Midas directives any more. So equities markets are continuing their freefall, which means the Boyz original cockamaimied plan to get ordinary middle class people to invest then use equities gains to reduce state corporations' debt is a dead duck.

The Boyz surprise yuan depreciation of just over 3% was going to be a quick-action 10% deterioration but the shock reaction globally has frozen the Boyz in their tracks. So unless the Boyz charge ahead anyway, they aren't going to produce any more still inadequate amounts of yuan in the economy. The US Treasury unreported proposal put over the past weekend to implement QE has only further confused the Boyz because they haven't ever done it and have no clue how to do it in their mangled and uncoordinated systems of economics, finance, gargantuan corruption.

The decline in manufacturing continues to accelerate as does the ongoing decline of exports. Deflation set in earlier this year. The new middle class was already in a tatters due to the bursting of the housing and property bubble when the Boyz undertook their campaign to tell 'em to invest it all in the equities markets instead. Reckless bank lending was ordered to enhance equities purchases and now all the margin calls have added significantly to the existing proliferation of npl bloodclots in the state owned banks, which is all the banks. The shadow banking system is breaking a lot of debitor kneecaps for not much return.

Global markets have been openly asking where Xi Jinping is in all of this as nobody has seen or heard much of anything from him. Fact is the political system is more unstable now than it had been since 1989 due to acute factional hostilities. Two major coup plotters of recent years are behind bars but it has become obvious during recent months Xi didn't get all of 'em.

So the US's biggest legitimate creditor is in financial trouble ?That doesn't bode so well for the US. The more capital flight in China, means more selling of China's stock of US debt. The more selling of dollar debt means dollars will start to flood the forex markets. Which will lead to an uptick in dollar velocity and inflation.

In short, the more trouble China is in, the more trouble the US will find itself in

The global corporate debt that is denominated in $9 Trillion USD provides a notion of the strength, breadth, resiliency as may be needed of the USD as the global medium of trade and as the global reserve currency.

The Boyz in Beijing meanwhile are raising the probability to global markets that they're going to expend their forex reserves of almost $4 Trillion USD value during the next 12-24 months. The CCP Boyz hold only $1.1 Trillion of actual USD obligations due them. The US Treasury will manage any CCP China bankruptcy successfully even without an executive order by POTUS freezing US Treasuries held by the CCP Boyz. A freeze by POTUS of US financials held by the CCP Boyz just won't be necessary.

The Fed is meanwhile trying to get inflation up to 2% so an assist by the unawares CCP Boyz might not be unappreciated. A concomitant dollar velocity if it occurs is not necessarily bad.

Beyond strictly US interests, if the Fed does reduce rates in September anyway, as many market makers are advocating yesterday and today, the yuan will further depreciate without any action necessary by the Boyz, and the less the bumbling Boyz do in all of this the better. A major reason for the 3% yuan depreciation earlier this month was to somewhat counter the staggering capital flight of $530 billion the past five quarters and another $400 billion in July and August. Add to this the $1 Trillion of Chinese capital that has in recent years left through underground portals with numerous families and there isn't much doubt the yuan is virtually worthless, so what's to worry.

There's not much more trouble that the CCP Boyz can get in to because they're maxing out more than enough disasters now. Of course the huge crashing in the CCP China is not over by a long shot as there's much much more to cascade down on them continuing in to next year. The Boyz simply have far far too many balls in the air for them to juggle everything any more or at all. Look for the CCP Boyz new five-year plan to come from the Fed.

The Fed is already the biggest holder of US debt followed by China. There is no way the Fed can keep interest rates at 0 or even below 25 basis points without QE 4 and beyond. if China keeps selling to replenish capital flight.

I know the US tries to wish wash this put being the debtor in this situation is not the position of strength, Unless of course, this time is diffrent.

[Publicus]

There are so many severe problems manifesting that looking at this one interest rate fiddling indicates the breadth and depth of it.

The yuan has remained effectively pegged to the USD so, unlike in Thailand where in 1997 the baht remained disastrously pegged, the CCP Boyz moved off the dime to depreciate. Just as in 1997 Thailand however capital is fleeing China and the depreciation both addresses and confirms it. Money has dried up in the CCP China so this fifth rate reduction so far this year simmultaneously confirms the fact and tries to address it.

The CCP Boyz further reduced the Triple-R ratio yesterday which is what they always do when capital moves out significantly enough. Conversely, the Boyz have always increased the ratio when capital has flowed in significantly. So the current series of reductions further confirms the paucity of money in all of the Boyz systems.

The Boyz can't use their usual plethora of fiscal stimulus mainly because they're grabbing at whatever money they can identify to throw at the crashing stock markets (big Shanghai in the North, smaller Shenzhen in the South). Their authorizing last week of private pension funds to 'invest' up to 30% of their capital value --1 Trillion yuan-- in the dying quail stock markets was a strong plea rather than an order because no one is following blatantly inept and reverse Midas directives any more. So equities markets are continuing their freefall, which means the Boyz original cockamaimied plan to get ordinary middle class people to invest then use equities gains to reduce state corporations' debt is a dead duck.

The Boyz surprise yuan depreciation of just over 3% was going to be a quick-action 10% deterioration but the shock reaction globally has frozen the Boyz in their tracks. So unless the Boyz charge ahead anyway, they aren't going to produce any more still inadequate amounts of yuan in the economy. The US Treasury unreported proposal put over the past weekend to implement QE has only further confused the Boyz because they haven't ever done it and have no clue how to do it in their mangled and uncoordinated systems of economics, finance, gargantuan corruption.

The decline in manufacturing continues to accelerate as does the ongoing decline of exports. Deflation set in earlier this year. The new middle class was already in a tatters due to the bursting of the housing and property bubble when the Boyz undertook their campaign to tell 'em to invest it all in the equities markets instead. Reckless bank lending was ordered to enhance equities purchases and now all the margin calls have added significantly to the existing proliferation of npl bloodclots in the state owned banks, which is all the banks. The shadow banking system is breaking a lot of debitor kneecaps for not much return.

Global markets have been openly asking where Xi Jinping is in all of this as nobody has seen or heard much of anything from him. Fact is the political system is more unstable now than it had been since 1989 due to acute factional hostilities. Two major coup plotters of recent years are behind bars but it has become obvious during recent months Xi didn't get all of 'em.

So the US's biggest legitimate creditor is in financial trouble ?That doesn't bode so well for the US. The more capital flight in China, means more selling of China's stock of US debt. The more selling of dollar debt means dollars will start to flood the forex markets. Which will lead to an uptick in dollar velocity and inflation.

In short, the more trouble China is in, the more trouble the US will find itself in

The global corporate debt that is denominated in $9 Trillion USD provides a notion of the strength, breadth, resiliency as may be needed of the USD as the global medium of trade and as the global reserve currency.

The Boyz in Beijing meanwhile are raising the probability to global markets that they're going to expend their forex reserves of almost $4 Trillion USD value during the next 12-24 months. The CCP Boyz hold only $1.1 Trillion of actual USD obligations due them. The US Treasury will manage any CCP China bankruptcy successfully even without an executive order by POTUS freezing US Treasuries held by the CCP Boyz. A freeze by POTUS of US financials held by the CCP Boyz just won't be necessary.

The Fed is meanwhile trying to get inflation up to 2% so an assist by the unawares CCP Boyz might not be unappreciated. A concomitant dollar velocity if it occurs is not necessarily bad.

Beyond strictly US interests, if the Fed does reduce rates in September anyway, as many market makers are advocating yesterday and today, the yuan will further depreciate without any action necessary by the Boyz, and the less the bumbling Boyz do in all of this the better. A major reason for the 3% yuan depreciation earlier this month was to somewhat counter the staggering capital flight of $530 billion the past five quarters and another $400 billion in July and August. Add to this the $1 Trillion of Chinese capital that has in recent years left through underground portals with numerous families and there isn't much doubt the yuan is virtually worthless, so what's to worry.

There's not much more trouble that the CCP Boyz can get in to because they're maxing out more than enough disasters now. Of course the huge crashing in the CCP China is not over by a long shot as there's much much more to cascade down on them continuing in to next year. The Boyz simply have far far too many balls in the air for them to juggle everything any more or at all. Look for the CCP Boyz new five-year plan to come from the Fed.

The Fed is already the biggest holder of US debt followed by China. There is no way the Fed can keep interest rates at 0 or even below 25 basis points without QE 4 and beyond. if China keeps selling to replenish capital flight.

I know the US tries to wish wash this put being the debtor in this situation is not the position of strength, Unless of course, this time is diffrent.

This is the first time a foreign government that is not a formal treaty ally or partner has purchased so much in US Treasuries and other instruments so precautions were taken long ago. This is especially so due to the CCP Boyz in Beijing being dictators of the Marxist-Leninist-Maoist malady.

The CCP teaches in all their schools to all their students for instance that the United States is the number one enemy. Sometimes the CCP Boyz in their national curriculum and CCTV programming oscillate between their number one sworn enemy being Japan or the United States. But rest assured we are up there on the CCP Boyz list. And we know it.

The CCP Boyz do not possess the T-Bills they purchase. The Treasuries are in the possession of the US Treasury Department in Washington, not in the possession of the CCP Boyz in Beijing. The US Treasury Dept issues notes of purchase, not the T-Bills themselves.

POTUS is authorized in law to freeze any US Treasuries activity by any foreign government or entity at any time for any reason for any period. (Also true for any one of a multiplicity of reasons.)

Some people haven't got it yet that the CCP China is in the process of going tits up. These people are still talking as if the CCP China were a normal country with a normal government and a market economy that is simply having a cyclical U downturn or a sharp V slump, and that it will eventually come out of it to pull itself together. Fact and reality are the whole thing in the CCP China is wrong, wrong, wrong and it is entering its inevitable period of collapse.

The CCP Boyz also know that when they go under the United States will be there with C-130 Hercules cargo planes full of USD cash. QE Supercharged to the Nth power. I'll say again, the CCP's next five-year plan will be written by the Fed, the US Treasury Department, the IMF.

In mid-September if the Fed does go ahead to take the rate from zero to even 0.25 it hangs out to dry the economies of the CCP China, Russia, Brazil, Turkey first and foremost among the emerging markets.

[ExpatOilWorker]

What will be the next "natural" step in this unfolding China crises?

Another devaluation? Rate cut? Decline in stock prices?

The real-estate market seem like it is due for a major correction. According to a 60-minutes report last year, there is 60 million empty condos in China and they keep building.

The put this number into perspective, then there is about 500,000 condos in greater Bangkok, hence 120 empty Bangkoks in China.

[Naam]

What will be the next "natural" step in this unfolding China crises?

Another devaluation? Rate cut? Decline in stock prices?

The real-estate market seem like it is due for a major correction. According to a 60-minutes report last year, there is 60 million empty condos in China and they keep building.

The put this number into perspective, then there is about 500,000 condos in greater Bangkok, hence 120 empty Bangkoks in China.

to put this number in perspective a look at China's population growth and the housing demand of an exponentially increasing middle class with adequate financial means has to be taken into consideration.

then the estimated demand (figures from 2011) of 15-20 million housing units per annum (not necessarily already existing luxury units) suddenly changes the "120 empty Bangkoks" and "they keep building) to a meaningless journ-àrse-listic sensational presentation.

here's something about the "major correction":

Financial Times May 2015

China housing market led by robust demand

Purchases by owner-occupiers rather than financial investors appear to be driving rising home sales.

Chinese home sales continued their upward streak in May. Sales increased 30 per cent year on year in the month, according to the Chinese National Bureau of Statistics.

What is driving this recovery? Surveys conducted by China Confidential, an investment research service from the Financial Times, suggest the answer is genuine home buyers rather than speculators.

Potential home buyers surveyed by China Confidential are expressing positive sentiment towards buying a home for self-occupancy, but remain negative towards buying property as a financial investment.

The China Confidential Home Buying Sentiment index — a diffusion index where a reading above 50 indicates that consumers think that now is a good time to purchase a house for self-occupancy — rose to 53.9 in May.

The China Confidential Property Investment Sentiment index remained in negative territory, however, at 45 last month.

Rising demand from genuine homebuyers appears to be mainly the result of increased purchases from upgraders — existing homeowners wishing to relocate to a new property.

http://www.ft.com/intl/cms/s/3/1b31b3d0-1056-11e5-ad5a-00144feabdc0.html

[Harsh Jones]

The Fed is already the biggest holder of US debt followed by China. There is no way the Fed can keep interest rates at 0 or even below 25 basis points without QE 4 and beyond. if China keeps selling to replenish capital flight.

I know the US tries to wish wash this put being the debtor in this situation is not the position of strength, Unless of course, this time is diffrent.

This is the first time a foreign government that is not a formal treaty ally or partner has purchased so much in US Treasuries and other instruments so precautions were taken long ago. This is especially so due to the CCP Boyz in Beijing being dictators of the Marxist-Leninist-Maoist malady.

The CCP teaches in all their schools to all their students for instance that the United States is the number one enemy. Sometimes the CCP Boyz in their national curriculum and CCTV programming oscillate between their number one sworn enemy being Japan or the United States. But rest assured we are up there on the CCP Boyz list. And we know it.

The CCP Boyz do not possess the T-Bills they purchase. The Treasuries are in the possession of the US Treasury Department in Washington, not in the possession of the CCP Boyz in Beijing. The US Treasury Dept issues notes of purchase, not the T-Bills themselves.

POTUS is authorized in law to freeze any US Treasuries activity by any foreign government or entity at any time for any reason for any period. (Also true for any one of a multiplicity of reasons.)

Some people haven't got it yet that the CCP China is in the process of going tits up. These people are still talking as if the CCP China were a normal country with a normal government and a market economy that is simply having a cyclical U downturn or a sharp V slump, and that it will eventually come out of it to pull itself together. Fact and reality are the whole thing in the CCP China is wrong, wrong, wrong and it is entering its inevitable period of collapse.

The CCP Boyz also know that when they go under the United States will be there with C-130 Hercules cargo planes full of USD cash. QE Supercharged to the Nth power. I'll say again, the CCP's next five-year plan will be written by the Fed, the US Treasury Department, the IMF.

In mid-September if the Fed does go ahead to take the rate from zero to even 0.25 it hangs out to dry the economies of the CCP China, Russia, Brazil, Turkey first and foremost among the emerging markets.

If China goes under, who is there to purchase the new issues and existing issues of US debt that bankrolls the US and its military ?

There is a reason the Fed has been talking about raising rates for 7 years yet hasn't done it. Because you cant taper a pozi scheme. You are aware that the Fed is raising rates on the US government right ? Russia has 17% interest rates right now.

Anyway look what happened when interest rates rose on the US govt last time. Just as rates started to bite nominally, the US economy collapsed.

[Harsh Jones]

What will be the next "natural" step in this unfolding China crises?

Another devaluation? Rate cut? Decline in stock prices?

The real-estate market seem like it is due for a major correction. According to a 60-minutes report last year, there is 60 million empty condos in China and they keep building.

The put this number into perspective, then there is about 500,000 condos in greater Bangkok, hence 120 empty Bangkoks in China.

So much Chinese propaganda...

You are aware that the Chinese stock market that crashed is still green for the year ?

[Publicus]

 

The Fed is already the biggest holder of US debt followed by China. There is no way the Fed can keep interest rates at 0 or even below 25 basis points without QE 4 and beyond. if China keeps selling to replenish capital flight.

I know the US tries to wish wash this put being the debtor in this situation is not the position of strength, Unless of course, this time is diffrent.

This is the first time a foreign government that is not a formal treaty ally or partner has purchased so much in US Treasuries and other instruments so precautions were taken long ago. This is especially so due to the CCP Boyz in Beijing being dictators of the Marxist-Leninist-Maoist malady.

The CCP teaches in all their schools to all their students for instance that the United States is the number one enemy. Sometimes the CCP Boyz in their national curriculum and CCTV programming oscillate between their number one sworn enemy being Japan or the United States. But rest assured we are up there on the CCP Boyz list. And we know it.

The CCP Boyz do not possess the T-Bills they purchase. The Treasuries are in the possession of the US Treasury Department in Washington, not in the possession of the CCP Boyz in Beijing. The US Treasury Dept issues notes of purchase, not the T-Bills themselves.

POTUS is authorized in law to freeze any US Treasuries activity by any foreign government or entity at any time for any reason for any period. (Also true for any one of a multiplicity of reasons.)

Some people haven't got it yet that the CCP China is in the process of going tits up. These people are still talking as if the CCP China were a normal country with a normal government and a market economy that is simply having a cyclical U downturn or a sharp V slump, and that it will eventually come out of it to pull itself together. Fact and reality are the whole thing in the CCP China is wrong, wrong, wrong and it is entering its inevitable period of collapse.

The CCP Boyz also know that when they go under the United States will be there with C-130 Hercules cargo planes full of USD cash. QE Supercharged to the Nth power. I'll say again, the CCP's next five-year plan will be written by the Fed, the US Treasury Department, the IMF.

In mid-September if the Fed does go ahead to take the rate from zero to even 0.25 it hangs out to dry the economies of the CCP China, Russia, Brazil, Turkey first and foremost among the emerging markets.

If China goes under, who is there to purchase the new issues and existing issues of US debt that bankrolls the US and its military ?

There is a reason the Fed has been talking about raising rates for 7 years yet hasn't done it. Because you cant taper a pozi scheme. You are aware that the Fed is raising rates on the US government right ? Russia has 17% interest rates right now.

Anyway look what happened when interest rates rose on the US govt last time. Just as rates started to bite nominally, the US economy collapsed.

 

Hey Harsh, the link below is to the chart in the post, and the quote is the bottom line from the article text that discusses the chart and which was omitted from the post.....

"If recent history is a guide, it will be a welcome sign to the market when the Federal Reserve decides to raise interest rates just as it was a very unwelcome sign to the market when the Federal Reserve began cutting interest rates for the first time in August 2007.

"History is a guide rather than an absolute, but if the past is prologue, a future Rate Hike later this year will not send the market spiraling to a new low (though the market may sell-off initially on the news) and in fact perhaps should be interpreted as a vote of confidence for the future of a recovering economy."

http://blog.afraidto...fed-funds-rate/

Any time you might want to get serious would be good.

[Publicus]

 

What will be the next "natural" step in this unfolding China crises?

Another devaluation? Rate cut? Decline in stock prices?

The real-estate market seem like it is due for a major correction. According to a 60-minutes report last year, there is 60 million empty condos in China and they keep building.

The put this number into perspective, then there is about 500,000 condos in greater Bangkok, hence 120 empty Bangkoks in China.

to put this number in perspective a look at China's population growth and the housing demand of an exponentially increasing middle class with adequate financial means has to be taken into consideration.

then the estimated demand (figures from 2011) of 15-20 million housing units per annum (not necessarily already existing luxury units) suddenly changes the "120 empty Bangkoks" and "they keep building) to a meaningless journ-àrse-listic sensational presentation.

here's something about the "major correction":

Financial Times May 2015 China housing market led by robust demand

Purchases by owner-occupiers rather than financial investors appear to be driving rising home sales.

Chinese home sales continued their upward streak in May. Sales increased 30 per cent year on year in the month, according to the Chinese National Bureau of Statistics.

What is driving this recovery? Surveys conducted by China Confidential, an investment research service from the Financial Times, suggest the answer is genuine home buyers rather than speculators.

Potential home buyers surveyed by China Confidential are expressing positive sentiment towards buying a home for self-occupancy, but remain negative towards buying property as a financial investment.

The China Confidential Home Buying Sentiment index — a diffusion index where a reading above 50 indicates that consumers think that now is a good time to purchase a house for self-occupancy — rose to 53.9 in May.

The China Confidential Property Investment Sentiment index remained in negative territory, however, at 45 last month.

Rising demand from genuine homebuyers appears to be mainly the result of increased purchases from upgraders — existing homeowners wishing to relocate to a new property.

http://www.ft.com/intl/cms/s/3/1b31b3d0-1056-11e5-ad5a-00144feabdc0.html

 

One would be wise not to argue with a single isolated snapshot news report from the FT in particular, however, back in May some other posters and assorted wizards were pointing to the CCP China stock markets and their skyrocketing performance as proof positive there were great financial strides and wealth creation occurring there, and that the CCP Boyz had pulled yet another rabbit out of yet another hat.

Then came the sudden but anticipated stock market crash beginning in July which brings us to the present disasters as the Boyz can't buy a hat and would give a yuan guaranteed IOU for a lucky rabbit's foot.

There isn't any more fiscal stimulus cause there isn't any more money which also means the stock markets are in a freefall because nobody on the planet believes the Boyz any more.

[NeverSure]

This is a severe liquidity crisis. China is running out of places to turn for money. Unlike western allies China is communist and is responsible for its people. The problems are similar to Russia's in that way. The USSR went belly up under similar circumstances.

I thumb my nose at all of those who have said that China is awash in money, that it's the Next Big Deal^TM, that it would overtake the West, that it was so rich it loaned the US money, that.. Whatever. They were all lies and now it's apparent that the emperor has no clothes.

This is a major crash that's been coming for some time.

China doesn't own much of value. It doesn't have nearly enough natural resources for the size of its population and has to buy energy and food. It provides cheap labor to manufacture things for other people that those other people invented and supervise. The big western companies make the real money from Apple products etc., not China.

Let's see how this plays out.

Cheers.

NS,

Usually I agree with most of your opinions.

Not this one.

- liquidity crisis - could very well be something else?

- running out of places to turn for money - doesn't go well with China's owning a big chunk of US funds in different forms;

This simply isn't true but it is oft repeated. China holds US Treasuries so it can engage in international trade. No one will accept or pay in China's money. China owns just enough US Treasuries to own enough USD for its needs. If it sold the treasuries today it would be out of biz tomorrow.

The US has the right to call in that debt and it has the means to do it. Now who's on shaky ground?

The largest owners of US debt by FAR are Americans. End of.

So the US's biggest legitimate creditor is in financial trouble ?That doesn't bode so well for the US. The more capital flight in China, means more selling of China's stock of US debt. The more selling of dollar debt means dollars will start to flood the forex markets. Which will lead to an uptick in dollar velocity and inflation.

In short, the more trouble China is in, the more trouble the US will find itself in

See above. There is an active worldwide market for bonds including US Treasuries and a problem is that there often aren't enough to meet all countries' FX needs. The USD is the unit of international trade. Even Thailand holds US Treasuries so it can engage in international trade in dollars.

People will buy US Treasuries with no or little interest return and sometimes it's a negative return because they see those Treasuries as safety, and because they need them. You are welcome to your opinion but it's just an opinion garnered from dumb blond news reporters who have no clue of their errors.

China is in a severe debt and liquidity crisis, trying to prop up its stock market and banks. It won't succeed.

Cheers.

[Publicus]

Well articulated of course by NS.

The main reason the CCP Boyz have bought US Treasuries is to have the value and strength of the USD and the USGovernment backing them.

The Boyz go into Thailand, Africa, South America, Central Asia and say, 'Hey, we have all this US money and it means we are powerful, rich, mighty. Not as mighty as the USA, but, hey, we're the new guyz on the block. And we are here to make you rich (your ruling elites especially) just simply by joining with us.'

The Boyz never have had any intention or plan to sell off US Treasuries or other instruments. Not except only as an emergency measure when the time came, and out of desperation, which is where they are now.

For one thing, it would be suicide cause the yuan would explode, exports would collapse completely, remaining capital in the CCP China foreign and domestic would leave within the hour if not quicker and sooner, and the Boyz would lose their big bucks personal toy called the People's Republic of China.

The stuff all the time about the Boyz selling off US treasuries are the fantasies, schemes and imaginings of crackpots and other marginals out on the fringes and extremes of society and civilization.

The Boyz have already begun converting their $4.7 Trillion of forex into yuan for emergency domestic use. The past three months their forex reserves have reduced to $3.6 Trillion and counting. They're moving their reserves in hits of $100-$300 billion a shot, which means by mid next year the CCP Boyz may well be paddling up the Chao Phraya towing long boats of USD and asking the brass hats for remote beachfront property.

The Fed increasing rates even a smidgen would be a statement to the emerging markets there's only one game in town so they'd better buy a ticket now, take a seat and wait their turn. The CCP Boyz, Putin, Brazl first and foremost. The Fed at this moment in Jackson Hole is getting it from global bankers and Western central banks to just do it, finally, once and for all ---just do it.

[Naam]

today, dear children, we are listening to fairy tales how China's foreign currency reserves (which never exceeded the value of USD 4 trillion) could miraculously fall by USD 1.1 trillion to reach the peanuts amount of USD 3.6 trillion.

China's Billion Dollar Question: Why Are Forex Figures Falling?

Foreign exchange reserves have fallen for four straight quarters, prompting experts to wonder where the funds are going

(Beijing) – What happened to China's foreign exchange reserve?

That's the question economists and analysts have been asking after the country's forex reserve, the largest in the world, posted its fourth straight decline in the second quarter. This is the longest such streak since 1998, and several financial institutions have predicted the declines will continue.

As of June, the amount of forex reserves held by the central bank stood at US$ 3.69 trillion, down from an all-time high of US$ 3.99 trillion in the same month last year, official data show.

Forex reserves fell US$ 36.2 billion in the second quarter of this year, after dropping US$ 113 billion in the first quarter. The final two quarters of last year also saw the forex reserves shrink. The third quarter's fall was 105.2 billion, and the fourth quarter's was 47.7 billion.

One obvious explanation for this streak – one that has some analysts concerned – is foreign capital leaving the country because investors lack confidence in the economic outlook and because the U.S. dollar is expected to become stronger.

Estimates for how much capital has left the country vary widely because of a lack of reliable data. The Chinese government does not publish many details of its forex holdings and investments, and there are many unexplained overlaps and potential conflicts in the ways different authorities report activities involving cross-border capital flows.

Consider this: Goldman Sachs reported on July 21 that about US$ 200 billion left China in the second quarter, a record amount. But a spokeswoman for the State Administration of Foreign Exchange (SAFE) said two days later at a press conference that there were no significant capital outflows in the first half year.

Goldman Sachs cited an unusually high surplus of commodities trading in the first six months of the year, arguing that an increase this great would have led to a surge in the central bank's forex reserve, unless it was canceled out by a greater outflow of foreign capital.

How much did "hot money" contribute to capital outflows?

To answer this, Zhu Haibin, chief China economist of JPMorgan Chase & Co., broke down cross-border capital flows into companies' forex deposits and debts, direct net foreign investment and yuan payments across borders. The rest was categorized as "hot money."

He used the central bank's forex reserve change minus the current account surplus to approximate the total amount of cross-border capital movements, which resulted in a net outflow of US$ 340 billion from last July to June. Of that, hot money contributed US$ 235 billion.