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

To: elmatador who wrote (128113)	1/11/2017 2:58:29 AM
From: Elroy Jetson	1 Recommendation Recommended By John Pitera Read Replies (2) \| Respond to of 218084

A $10 trillion bail-out comes out to a heart-stopping cost of $7,470 per Chinese citizen - not that many Chinese citizens could ever contemplate having that much money. What's going to happen is banks are going to be ordered to convert their loans into a percentage ownership of each of these firms they've lent to - which effectively means they not really banks anymore. Banks which have their capital tied up in corporate investments doesn't have any more money to lend than banks which have their capital tied up in bad loans. In order to convert Chinese banks back into banks after they become hedge funds by converting their loans into shares, the banks have to find investors with capital who will purchase their ownership stakes in these, often, money losing companies from the banks. Alternate to this, China can simply create more money for their banks to lend which would greatly accelerate China's inflation rates - essentially robbing Chinese citizens of their savings in order to recapitalize the banks. But they underlying problem remains. These companies, many of them steel smelting and fabrication firms continue to lose money because China greatly over-invested in this industry to employ the region around Beijing. Every plate or I-beam of steel they sell around the world is sold at a loss being subsidized by China's banks. The only solution is closing a large number of these steel makers. It's amazing to realize that steel plant closures in China will reduce demand for Australian coal, but not Chinese coal. Why? Because it was far less expensive to purchase coal from highly automated mines in Australia than it was to begin investing the needed hundreds of Billions of Dollars needed to modernize Chinese coal mines where miners still use pick axes deep underground. This reduction in steel capacity, currently from reducing the number of production days, is what has driven coal use in China to stop growing and begin to decline. Even President Xi's predecessors realized they couldn't continue to absorb this surplus steel building empty "new cities". This situation is astounding, but that's what it really is.