By David Stockman: China’s credit bubble fed the largest construction boom in history, and property prices rocketed higher so persistently that people believe luxury condos they never intend to live in are the best savings account. Now the credit pyramids under it are faltering.
Entries in China (81)
The word dollar didn’t even come up when the Bundesbank signed the agreement with the People’s Bank of China. President Xi Jinping and Chancellor Angela Merkel looked on. It was serious business. Everyone knew what this was about. No one had to say it.
By David Stockman: China, the greatest construction boom and credit bubble in history, has gone mad building, borrowing, speculating, scheming, cheating, and stealing. The source of this outbreak is monetary madness with a red accent.
By Nicholas Cunningham, Oilprice.com: The US coal market is shrinking, the industry’s prospects dim. Coal producers seek salvation overseas but face high transportation costs and cheap coal from other countries. And China is a major reason for the gloom.
China’s enormous, strenuously obfuscated credit bubble has led to flagrant misallocation of capital and spectacular malinvestments eternalized in vast ghost cities. That this will end is clear. How it will, is not. But here is a hold-your-breath version (1-min video).
The air in China can get so bad that the whole world talks about it. Though the government is taking the issue seriously and is doing a million things to get the fiasco under control, it remains unclear what exactly people will breathe ten years from now.
Central banks rule! We’ve seen it in 2013. They’ve accomplished the impossible: separating stock markets from the economies they’re based on. But in 2014, the US and China are trying to unwind these crazy policies – without taking down the entire global economy.
By John C.K. Daly of Oilprice.com: As the world moves away from coal due to its high emission of pollutants and greenhouse gases, in China the use of coal, the country’s main energy source, is predicted to soar 37% by 2020.
By Joao Peixe of Oilprice.com: The deal between Rosneft and China National Petroleum Corp to jointly develop a giant oilfield in Siberia may be tainted. I’m not talking about corruption or illegal activities, but rather the potential that the oil and gas in the field may be contaminated with radioactive materials from nuclear explosions.
BYD, the name of a Chinese electric vehicle and solar panel maker, stands for “Build Your Dream.” Maybe that’s what they’re trying to do in China. But here, they’re building a nightmare: broken promises, falsehoods, design flaws... all lushly funded by American taxpayers. And they paid Chinese workers in California $1.50 per hour to do it.
By Dave Forest, OilPrice.com: One of the most critical changes in global energy flows we've seen for years happened this week.
By Chriss Street: China’s Dagong credit rating agency cut the US to A- and maintained its negative outlook on solvency, warning: “The fundamental situation that the debt growth rate significantly outpaces that of fiscal income and gross domestic product remains unchanged.” But China’s need to dethrone the dollar as reserve currency goes deeper.
China’s economy grew barely above the government-decreed minimum of 7.5%. Deep frustrations simmer beneath the surface and can explode at any time. To maintain social stability, the government douses the land with money. Growth at any cost. But the results are majestic property and construction bubbles – and they can’t be inflated forever.
The US has abused its three phenomenal privileges – including the control of the only world currency – to put global financial stability at risk, “like a truck full of dynamite heading right toward us,” said the chairman of the International Advisory Board of the Universal Credit Rating Group. But a “new financial order” is forming. And there's a timeframe.
Supercar-makers Lamborghini, Ferrari, and Rolls-Royce are reacting to the forces whacking global markets for luxury products: a corruption crackdown in China, Abenomics in Japan, and the Fed’s money-printing in the US. The idea that sales in China, which is printing billionaires by the dozens, are crashing is a hard-to-swallow concept for the industry.
By Charles Kennedy, Oilprice.com: With wages increasing and strikes engulfing the country, the cheap labor force that fueled China’s economic boom by underselling competitors is coming to an end. The game is to move factories into the interior. But costs of land, water, energy, and shipping are also rising. So, offshoring to cheaper countries. But....
By Michael Lombardi, Profit Confidential: Automakers are exuberant. In August, light vehicle sales increased 17% from a year ago. Consumers are spending! Maybe we will see some economic growth. Sadly, this is a one-sided conclusion. Turns out, car loans are ballooning, and delinquencies are jumping.
“Seize the ground of new media,” Chinese President Xi Jinping said elegantly when he told state-owned media to get on the ball. So, effective today, the next chapter in seizing the ground of “new media” is this: people found by the Chinese judicial machinery to have posted libelous language online can expect three years in the hoosegow. Conditions apply.
The Big Shift: Chinese, Russians Replace People From (Formerly) Rich Countries As Big Spenders At Parisian Airports
In Paris, “Chinese” has a new meaning: money. This phenomenon shows up by the busload at luxury retailers where sales staff say a few words of bad Mandarin, instead of bad English, in hawking overpriced handbags and glittery baubles. Now Aéroports de Paris has put a number on it. A glimmer of hope for France, though perhaps of the wrong kind.