Keeping up to date on China Stock/Economic news

I have been trying to get a daily reading list together so I can more closely follow economic developments in China. I was trying to stay as far away from western viewpoints of China as possible. Reading western news sources is like reading about science in newsweek vs reading china business based and focuses news sources -- which is more like reading the actual technical journal articles.

Ok here's my notes on the topic so far:

http://www.chinaview.cn/business/index.htm

-Decent - basically Xinhua's (Official Chinese News Agency) business section


http://english.gov.cn/service/business/sbw.htm

-brief gov news agency business headlines.


http://www.chinadaily.com.cn/english/bw/bweconomy.html

-Not bad with a lot of original information! for example:
Quote:

"Tax treaty benefits
In this article, we shall analyze the process of adopting a Mauritius company as a holding vehicle. The China-Mauritius tax treaty offers some tax benefits in structuring a tax efficient holding structure for PRC investment."

http://www.atimes.com/atimes/china.html
- This is an example of what I didn't want to read. It's all about what other countries think of China and not what is actually going on in China. Every article has political overtones and implied western criticism of China. This is just a bunch of noise IMHO.

http://www.einnews.com/china/newsfeed-china-business
Looks good but you have to subscribe.


http://www.cbiz.cn/
Oh you bears will like this site :). Not bad stuff...No new original content for a while...
Quote:

The accusation of endemic, pervasive corruption that foreign critics of China, particularly Americans, level at it is now rendered passe, unfashionable in light of the systemic, widespread and criminal fraud that defines the American financial system and its manipulations of securitized mortgage debt.

http://www.china.org.cn/english/business....

Pretty Focused

More to Come....

Behind the "Global Savings Glut"

A recent article in The Arab Times seems to shed some light on where all the money sloshing around the world creating asset bubbles is coming from:

We in Kuwait seem to have run out of ideas for the time being and our past generations were more creative and looked deeper into our human resources to give their best. The overseas investments have their limits and it is time to seriously think of ways of making and creating new job opportunities for our youngsters and improve their capabilities and abilities. This is the only way to move forward as our financial resources are beyond our abilities and capabilities. It may take some time to come with the right answers but this will not happen without passing some laws through our parliament. Most importantly the land utilization law and liberalization laws to allow the private sector to move forward. The government owns more than 95 percent of the Kuwaiti land and with the BOT law still under revision almost all projects have been shelved awaiting the new laws to be approved.

The Super SIV? Will it work or are there one too many holes in the dike.

The Super SIV appears to be on it's way to sanitize all the sub-prime CDOs.

Will it work?

Probably Not... Why?





Hole in the Dike #1:

The Chinese and the Japanese aren't buying it anymore as outflows of capital show:

Asian Investors Dumping Treasuries

Asian investors dumped $52bn worth of US Treasury bonds alone, led by Japan ($23bn), China ($14.2bn) and Taiwan ($5bn). It is the first time since 1998 that foreigners have, on balance, sold Treasuries.

Mr Ostwald warned that US bond yields could start to rise again unless the outflows reverse quickly. "Woe betide US Treasuries if inflation does not remain benign," he said.

See that chart above? That's the August data, before they lowered rates!

Hole in the Dike #2:

The worst isn't even here yet! See below for a timeline of when rate resets are going to hit. It starts in January 2007.

















No foreigners want to buy our debt and there are going to be a ton of people defaulting on their mortgages in the coming months. So all that debt, wherever they hide it is going to be worth WHAT Now?? The U.S financial system has suffered an epic mortal blow. The blow is to the credibility of the system is now totally shot. Bernanke is a smart guy and a well trained economist but I don't think he realizes that we are operating in a vastly different economic climate than 20 even 10 years ago where suddenly the U.S isn't the only place to invest anymore. The world has caught up to the U.S in many ways but we aren't anymore cautious.

SIVs ..... financial panics, august credit crisis, etc, explained...

Financial BS is so entertaining when you actually try to take it seriously.

The Big Sub-Prime Bailout Game

It seems that everybody is trying to sort out the justice of the situation. People see empty neighborhoods with unkempt lawns and they want to help, it's only natural.

Bush: Nobody did anything wrong, there's just a confidence crisis keeping people from being able to re-fi. In this sense, this is the most blissfully academic conventional macro solution because it looks at the whole situation as composed of undifferentiated perfectly uniform economic quantities like interest rates and monthly payments.

Bernanke: Bernanke thinks that again no one should pay it's just that whoever bought the MBS paper got too smart and got scared and we need to add more complexity to get the con-job started again.

Obama: Think that obviously it's the financial industry that is to blame. He is right about the perpetrator but wrong about the victim. The borrower got to live in a nice house they would never be able to otherwise afford for a couple months and got tons of money for toys via home equity. Ruined credit ratings aren't that big of a deal, especially if it happens to everyone else at the same time. The real victims are the foreigners who bought all the loans.

Pearlstein: Pearlstein thinks that a mortgage is a kind of progressive income tax that is paid to banks and should be apportioned by income. He doesn't know yet that someone on the other end of the liar loan deal plunked down $500,000 because they had an open order to buy anything moody's said was AAA paper and doesn't think they should be getting such a painfully low ROI on their money when there are plenty of other investments like U.S Treasuries that yield better.


The real just solution would be to have the foreign banks, hedge funds, pension funds, etc owning the houses, the brokerage firms, the ratings firms, the banks, the conduits and everything in between. They'll only get 50 cents. The big problem is is that during the global savings glut all the global money managers had too many dollars flying around and couldn't figure out what to do with them all. Nothing could absorb all those dollars so they just plowed them back into the U.S markets. They should have all just stayed in cash but hey, they are fund manager and so they have to manage.

The most interesting unreported wars of the last 10 years

Second Congo War - A.K.A Africa's World War

Second Congo War at Wikipedia

Why : 3.8 million people died... Since 1996 6 to 7 million people have died in Congo. Seems like a big free-for-all grab for resources by the regional powers. A kind of preview of the new wars of multi-faction anarchy and bloodshed in the midst of plenty that Iraq is now an example of.

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The Second Chechen War

Second Chechen War At Wikipedia

Why: Russia goes head to head with entrenched Islamic fundamentalist separatists, fights with total disregard for Geneva Convention, and wins. This is the first war that I am aware of where the full brunt of advanced weaponry was brought to bare in unrestricted warfare.

Gen Yer gives up on Reality TV Strategy

Mr. "I Am Facing Foreclosure" shut his blog down. It's really ugly. I tell ya. The guy tried splattering his whole arguably legally dubious situation onto the Internet and it didn't work.
More on this at Another FB'er

———————————
What I did was Stupid!!

September 24, 2006.

This blog was the WRONG kind of exposure. I APOLOGIZE to my friends, family, associates and especially EVERYONE WHO HELPED ME with my real estate transactions.

I DO NOT BLAME ANYBODY for ANYTHING and take full responsibility.

What started as an honest desire to share my experience turned into something dangerous - playing with fire. After talking to a business associate this morning I realized I went TOO far and shared TOO much. I turned something small into a big exaggerated mess. Others were telling me this too, but I wasn’t getting it. Now I crossed the line. I misused my ambition.

I have damaged my reputation and I have damaged many good relationships through this. I never meant to hurt anyone. So to stop any further damage I am shutting down and laying low.

I am sorry.
–
Casey Serin [email}

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Inflation vs Deflation

Over at Mish's blog I've been having a lively inflation/deflation debate. Here's some of it.

Ok I've heard the "Imbalances" argument over and over again. It has been popular for at least 20 years since Regan lamented about our national debt. Remember Ross Perot and how we did very well lamenting about the trade deficit back in the early 90s? Well, we're still here...

The big hole in their argument is that on an interest rate basis and on a purchasing power parity basis, which are the ony two things that matter with regards to currency values, the dollar is doing fine. Europe and Japan are very expensive and interest rates are lower. It's as simple as that. China, India, Russia and Brazil are cheaper but nobody trusts their financial system to handle institutional size investments. Face it, no country in the world treats wealthy people better than the U.S (with the exception of Singapore, and Hong Kong) and they know it, which is why they keep their money here.

That's it. Sorry to let all you guys waiting for the great economic "turning". As things get cheaper here because the consumer taps out there will be deflation because the U.S will be on an even better basis Purchasing Power Parity wise and the dollar will probably strengthen because all those dollars will start getting sucked up for debt repayments exceeding income growth.

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The real problem is Ben Bernanke and his "electronic printing press" comments. The guy could try something really stupid and just start printing endless money. Up till now our financial system has been based on debt creation. That has a limit, at some point you reach the point where nobody can pay or doesn't want to pay anymore out of current income anymore and then the defaults start. The bigger the bubble, the more people who were able to borrow wildely, the fewer people left with money around to buy the dips and soften the drop out.

Now Benny has made some speeches were he said that there are all kind of wild "unconventional measures" he is willing to try in the event of a possible deflation.

However, when they started their anti-deflation campaign in 2002 all this money started really flooding into gold and to some extent, the Euro. The offical reason rates were raised in 2004 was inflation. I think that there was also some fear of the dollar collapsing. They had to raise rates quite a bit to pop the commodity bubble and to keep gold from launching into outer space.

http://www.kitco.com/LFgif/au3650nyb.gif

I think they are still scared of gold and the euro enough to keep rates above whatever the ECB is offering. If they weren't why did they raise rates since mid 2004? Buffet probably doesn't trust Bernanke and the Bush admin and is hedging his bets just in case they try something monumentally stupid.

....

From what I've read, there are a lot of VERY intelligent people posting on these boards. How come such massive gaps exist between what each believe will occur in the future, when, for the most part, they all agree on what I described in the first paragraph?

I think the main difference is that the inflationists are unaware how money is created. I don't even think they know how money is created. They just point to the trade deficit and the national debt and demand the creditor debtor relationship between the rest of the world and the U.S re-adjust and think it will be a hyperinflationary dollar decline that will do it. A lot of this inflationist sentiment is driven by a obsession with the Weimar germany analogy of the present American government and a strong desire to see the end of U.S hegemony.

The truth is is that not withstanding Bernanke's crazy talk about electronic printing presses, the government does not print money and hand it out. It is created out of thin air by the fed and handed by the fed to the government in exchange for a treasury note. The more debt we are in, the larger the money supply. If debt levels fall then the money supply decreases and there is deflation. All this money needs to be paid back with interest and must be continually replaced by new debt. There is no other way the government creates money so when lending slows down, barring some really stupid "new paradigm" Congress/Bernanke deus ex machina" there will be deflation.

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Just for completeness, there is another important way that money is created, which is by the multiplier effect, that is that banks can lend 90% of their reserves out, the money then winds up in other banks who can lend 90% of their reserves out, etc.... This isn't that important though because there is so much money floating around in the world dollar pool because of the deficit that now all those dollars floating around are starting to overwhelm the domestic money supply as far as the amount of power they have over the economy