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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?


To: Metacomet who wrote (102833)9/19/2013 8:05:58 PM
From: GPS Info  Respond to of 217634
 
For anyone inspired by that talk, my bet is still open: Message 28666361

And our timelines are the same.<g>

Economists In China Are Asking A Disturbing Question: Where Has All The Money Gone?

Chinese credit growth has outpaced GDP growth for some time.

Some have argued that this is the main bear argument on China right now.

Many are asking why this is the case? Where all the money's gone? And is China facing it's own Minsky moment — a phenomenon that refers to periods of speculation that lead to crisis and that was named after economist Hyman Minsky who wrote about the inherent instability of bull markets.

In a new note, Bank of America's Ting Lu writes that this has raised questions about whether the non-performing loan ratios are higher than expected, if there are more artificially propped up investment projects that are using new credit for interest payments, is there more speculation than people realize

"Property speculation and a rising number of zombie companies," partly explain the credit-GDP growth gap he write. "More careful study tells us that the gap is smaller than what had been believed due to double counting and other distortions, and a majority of the gap could be ascribed to reasonable changes in fundamentals and short-term factors which should not be extrapolated."

From Lu:

"In our view, the 12ppt gap could be decomposed as follows: 2.7ppt due to double counting of funding via non-banking intermediaries; 1.0ppt on FX loans which were used for speculating on RMB/USD appreciation; 0.3ppt on RMB loans used for faking RMB trade settlement; 1.5ppt on zombie companies as a result of bad investment; 3.5ppt on changing fundamentals such as automation, rebalancing and falling returns on FAI; and 3.0ppt on short term factors such as the increased volatility in commodity prices and eased (and cheaper) credit."

Here's a chart that breaks it down easily:



But Societe Generale's Wei Yao is not so optimistic. In a note, excellently summed up by The Financial Times, Yao used methodology from the Bank for International Settlements (BIS) to calculate debt servicing ratio and applied it to China.

Doing that she found, "a shockingly high debt service ratio of 38.6% of GDP, of which 9.2% goes to interest payment (=6.3%×145 % of GDP) and the rest principal. At such a level, no wonder that credit growth is accelerating without contributing much to real growth!

Yao does think the actual DSR is lower than her calculation but writes that "a non-negligible share of the corporate sector is not able to repay either principal or interest, which qualifies as Ponzi financing in a Minsky framework."

Two slightly different takes on what this means for China?

Lu doesn't see an imminent crisis but does see need for reform. "In our view the central government needs to take more responsibility in infrastructure spending, move some debt burden from local governments to itself, build a functioning municipal bond market, improve prudential regulations, restructure the stock markets to restart IPOs, and make it easier for the private sector to obtain both credit and equity funding.

He also thinks the credit-GDP growth gap will narrow to less than 3 percentage points in two years.

Yao on the other hand writes that this is all still being held together because the state backs both the banking system (not shadow banking), and their support to local governments. "We think this precarious equilibrium could last a bit longer but not much longer, particularly if the central government does nothing."

businessinsider.com



To: Metacomet who wrote (102833)9/19/2013 8:54:58 PM
From: TobagoJack  Read Replies (1) | Respond to of 217634
 
yes, have known eric and his mom since the early 1990s soon after his graduation from stanford and relocation back to asia

i agree w/ 100% of what he presented and observed.

real income growth and standard of living trajectories pointed correctly. the plan for the future well specified. milestones clear. accountability fixed. finger-pointing near impossible. implementation so far so good. while waste is large, but then everything in china per prerogative of civilization-state is large. next frontier, the star fields, continuing where the ming dynasty / admiral zheng he left off.

to add some additional flavoring to his remarks about the 'system' and its 'organization', he missed one very extremely important point, and that i started to describe here, from the lowliest bathroom of an 8-bathrooms (two master's not counted) house, that which is attached to the guest room immediately adjacent to the front door foyer, normally reserved for the driver or go-for or some such same

Message 28942576

<<In the mean time stayed overnight in a 16,000 sft house in the northern capital of the new sovereign, in one of six guest rooms and my BATHROOM looks just so, very good for contemplation over the big issues of the day

Shall decamp today after meetings, to lower lodging to mere 5-stars hotel in town.

This corner of my room is a very good thinking spot.


The house has a commercial kitchen to enable gatherings, and sports two dining rooms to encourage discourse, plus 3d IMAX studio, plus plus, and oh, the staircase handhold is marble and lacquerware. Very nice. Somewhere is a big boat for contemplative use, and a long distance jet for tranquil travels.

The host is simply addressed as, "teacher", and he is in truth elected, but by his peers, meaning equals, and then appointed, but for life. His perks also are for life. He is chosen based on his record of doing good for the greater good. He can speak his mind, good news or bad tidings. He is untouchable. He has 59 colleagues, all doing good, and all qualified based on smarts. The 60 are from all walks of life, but are the best walkers of this land.

All very imperial, in the best tradition that worked and works, for 6000 years.

China is in good and astute hands.

All hail the new sovereign even as the new sovereign cannot touch the 60 teachers. The teachers, once 70-years young, move over to retirement mode, with full perks, to advise as they please, but no longer obligated to.

I thought I knew much about china. I now know I know hardly anything at all.

Universal suffrage was never Greece until the Greeks decided they wanted to ruin themselves. They have succeeded outstandingly well ;0)

As far as Capitol Hill goes, one got to ask one self, "what can ex-small town mayors and no-name lawyers possibly know about anything, never mind for-the-greater-good"
>>

the bullet points i wish to relate are:

(i) upon entering the house and meeting the friend of my in-law, the 70+ youngster full of good cheer, and knowing his career as related to my in-law, i was puzzled about the abode, and made a direct comment, "your _______ profession must have been fruitful". the host waved at it all and said, "what, this? it is all free and for the duration of mine and my wife's life"

(ii) intrigued, naturally, i said, "i am intrigued"

(iii) "my professional achievement is substantial but cannot possibly allow for the economics you see here, as the house was constructed w/o a budget and is simply the best of everything, and it allows me to interact w/ visitors and entertain as necessary"

(iv) "okay. do continue", i said

(v) "when i was 60 i got selected and accepted a post at the _______ of the _______ to advise the _______. the term is 5 years. i owe the 60-people strong office of 60-years and older folks' office to all the people who had in aggregate selected me, and to no one person or organization in particular. because of the selection protocol, and the age-60 rule, i along w/ my colleagues are not beholden to any governing cohort past present or future as our selection is firstly age-dependent, by many organizations, based on strict criteria, and once selected, are good for a 5-years term. the second 5-years term is dependent very much on what our immediate colleagues think of us and nothing much to do w/ who runs the government or the ruling party. in fact i am not a party member and belong to one of the many other parties"

(vi) "you are blowing my mind. but never mind. tell me more", i said

(vii) "once we are selected for the second 5-years term, we for all practical purposes are beyond any and all political influence by design of the system. we cannot be removed, and whatever perks we have we keep for life. at age 70, if we last that long, we retire from the active part of the office but still remain as active as we wish in the retired section of the office"

(viii) "what are the criteria by which you and the others are selected?", i said

(ix) "must be 60-years old"

(x) "easiest of many, i am guessing", i said

(xi) "not of many, but easiest. and we must be tops or near tops in our respective professions whatever they may be, and we must have our own ideas about our profession"

(xii) "hmmmmnnn. getting hard in a civilization state of 1.3 billion folks", i observed

(xiii) "the terms do get harder. we must be moral and ethical. to be 60-years old, tops or near tops in our profession, and be judged by all concerned to be moral and ethical is not as easy as being 60-years old. the criteria set now pretty much removes politicians, business people, lawyers and movie stars from the stew, and also likely removes anyone with a lot of hard to explain money, especially when judged by a wide selection electorates of people in the know"

(xiv) "yes, now i see why you by your profession is in the office along with presumably educators, authors, scientists, engineers, doctors, architects, and such", i agreed, and said, "any more of the criteria?"

(xv) "we must be universally acclaimed, meaning even our 'enemies' must not be able to point to any specifics of anything that may be termed 'wrong' in our 60-years of life, and 40-years of professional life. the most they should be able to say would be, 'i think ms a is a better choice than mr b, but i have nothing negative to say about mr b"

(xvi) "that is a tough one, to be age 60, at or near tops of a profession, have a clue, untainted by money and unpolluted by power, and be universally acclaimed even by enemies", i conceded

"okay, i have just a few questions, and they are ...

(a) when did the office get started
(b) what do you do in the office
(c) what are you doing now
(d) who knows about the office

(xvii) "the answers are

(a) the office got stopped in 1911 at the end of the last imperial dynasty and got reinstated in the late 50s

(b) before age 70 we as a group of 60 must endeavor to answer all questions put to us by ______ (an organization), and we can say anything we wish about the questions asked of us. they must listen to us but are not obligated to obey; although not obeying must be backed by reasons other than 'i do not like the answer'

after age 70 we as individuals can answer any and all questions of our own asking. we can attend any and all meetings anywhere in china. we can pick up the phone and call anyone in china, and get an audience. we can say whatever we please.

(c) we are now trying to come to grips w/ whether china should w/i 15 years build 50 cities the size of singapore or 500 cities of 1/10 the size, and figure out what the people in such cities would be doing.

(d) i think very few people outside of the governing system would know about the office. the top editors of the top newspapers should know."

(xviii) ... and so i posted the cryptic note Message 28942576 about a bathroom to mark the copybook

in my view 'electoral democracy' resulted from the failure of the preceding governing system, and itself is systemically doomed to fail especially when put in concatenation w/ a fiat money monetary regime, and so where the majority however defined and manipulated can always and do vote themselves money either pilfered, robbed, and or printed. at the end of every sorry day, hitler and mugabe were elected by the people for the people against either some other or all other peoples.

china's governing system is as was, based on merit, even if occasionally corrupted, and is proven to be sound by test of time.

above observation is very different than saying that i prefer one governing system to any other, for i prefer to personally opt out of all governing setups.

gold, hidden gold, assures opt-out capability and in enough troy ounces, ensures opt-out capacity

platinum too

amen, tj



To: Metacomet who wrote (102833)9/20/2013 5:02:55 AM
From: average joe1 Recommendation

Recommended By
dvdw©

  Read Replies (1) | Respond to of 217634
 
In political jargon, useful idiot is a pejorative term for people perceived as propagandists for a cause whose goals they are not fully aware of, and who are used cynically by the leaders of the cause.

en.wikipedia.org