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China the monster.
mullokintyre
post Posted: Aug 26 2014, 03:42 PM
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In Reply To: Barra's post @ Aug 26 2014, 02:25 PM

QUOTE
The next six months are going to be very telling. I can't see much to stop iron ore going below $80 or even $70 per tonne over that time frame and the likes of FMG will be in serious difficulty.


Howdy Barra,
If iron ore does fall to these levels, what do you think will happen to the AUD/USD connection??
I have always said that if things go badly wrong, the AUD will tank, regardless of whether the fundamentals say its a screaming buy or not.

Mick



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Barra
post Posted: Aug 26 2014, 02:25 PM
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In Reply To: wren's post @ Aug 26 2014, 12:15 PM

Yes they have built too much and unlike last time when the train nearly went off the rails, the current government is paralysed by the ongoing purge of corrupt officials / opponents of Xi Jinping.

As this story explains district officials are too scared to take ownership of stimulus projects and many are busy looking for the exit stage right. This is a stark contrast to 2008 when the floodgates were opened and every party official got their head stuck into the trough.

The next six months are going to be very telling. I can't see much to stop iron ore going below $80 or even $70 per tonne over that time frame and the likes of FMG will be in serious difficulty.

http://www.forbes.com/sites/gordonchang/20...ng-the-economy/


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wren
post Posted: Aug 26 2014, 12:15 PM
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From the F.T.
…To understand the scale of the resulting building boom, consider this statistic: in just two years – 2011 and 2012 – China produced more cement than the US did in the entire 20th century.

…In the past decade much of China’s construction frenzy has been driven by real demand, from people wanting to urbanise or upgrade their homes or from speculators who have almost no other options to invest their newfound wealth.

…The government itself has an enormous incentive to keep pumping the bubble up, since all land is technically owned by the state and land sales made up 60 per cent of local government’s budgetary revenues last year, according to estimates from JPMorgan.



…The turning point seems to have come because China has simply built too much.

Until 2011, the market mostly saw supply shortages but today total floor space under construction is enough to satisfy well over four years of demand at a national level.

In some of the worst affected provinces, there is enough supply for more than seven years of demand.

If this really gets out of control,the Happy Days in OZ would transform into the Iceland Nightmare.Still….it most likely won't happen ….

 
arty
post Posted: Aug 25 2014, 03:09 PM
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China's Shanghai Composite index is at strong resistance; Momentum has been under a Bearish cloud for a few weeks now.

Attached File  Shanghai_pm_25_08_14.gif ( 13.65K ) Number of downloads: 7

That doesn't bode well for our exporters and would explain why the likes of AGO, MGX, FMG ... are slumping.



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I trade daily, but I am not a licensed adviser. Whether you find my ideas reasonable or not: The only person responsible for your actions is YOU.
I follow two rules: (1) There are no sacred truths. All assumptions must be critically examined. Arguments from authority are worthless. (2) Whatever is inconsistent with observed facts must be discarded or revised. We must understand the Market as it is and not confuse how it is with how we wish it to be. (inspired by Carl Sagan)
 
triage
post Posted: Jul 14 2014, 04:37 PM
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In Reply To: nipper's post @ Jul 10 2014, 09:16 AM

I wonder whether this is the establishment's, or at least that part of the establishment that is in the Bank of China's corner, response to the outing of the bank as a "money launderer"....

https://au.news.yahoo.com/world/a/24449208/...cial-tv-anchor/

I read somewhere that both CCTV and BoC report directly to the State Council so neither have to pay much regard to directives and regulations issued at the Departmental level. But I also read where a directive was recently issued by the State Council that government agencies should not be critical of other government agencies, at least not in public. So when CCTV went public with those allegations againt Bank of China, the thinking was that CCTV would only violate that directive and expose Bank of China's activities if it had been given clearance to do so from the highest level, and as such it may indicate that the powers that be were about to target some heavy hitter(s) in the Bank of China network. But if the forces associated with the Bank of China have been able to knock off such a high profile CCTV personality - quite likely he was a nobody in the CCP hierarchy and his ousting was intended as a shot across the bows of those attempting to use CCTV in a power struggle against associates of the BoC - then maybe it means that the Bank of China network has access to cadres better positioned than whoever the CCTV network was relying on (?).

I read somewhere else that what the Bank of China was doing had actually been sanctioned as a trial run for opening up such a scheme more generally and that CITIC had also been cleared to run a similar experiment. However there is little doubt that sanctioned or not the arrangement is being used to get enormous amounts of money out of China.

http://fivethirtyeight.com/datalab/why-the...ate-in-the-u-s/

One of Warren Buffet's folksey sayings is that "Only when the tide goes out do you discover who's been swimming naked."

Were the forces behind CCTV and not BOC to win in this power struggle then large numbers of "naked cadres" may be caught out by the tide of events...

http://www.chinadaily.com.cn/2014-07/02/co..._17636215_2.htm



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"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

"It is the mark of an educated mind to be able to entertain a thought without accepting it." Aristotle
 
Brierley
post Posted: Jul 10 2014, 03:37 PM
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In Reply To: nipper's post @ Jul 10 2014, 01:24 PM

SIV program: The Great Wall of Frustration

http://www.businessspectator.com.au/articl...all-frustration

 


nipper
post Posted: Jul 10 2014, 01:24 PM
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In Reply To: Brierley's post @ Jul 10 2014, 12:44 PM

what is BoC's fee for providing this service?

On which side of the transaction? - clipping the ticket ex-China, and in Haymarket?






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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time."
- Dr John Hussman
 
Brierley
post Posted: Jul 10 2014, 12:44 PM
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In Reply To: nipper's post @ Jul 10 2014, 09:16 AM

and what is BoC's fee for providing this service ?

 
nipper
post Posted: Jul 10 2014, 09:16 AM
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Chinese 'washing cash' in Australia
  • Peter Cai and Fergus Ryan
QUOTE
THE China state broadcaster CCTV has launched an extraordinary attack on the Bank of China, one of the country's most powerful government-­controlled financial institutions, accusing it of money-laundering in Australia and other countries.

Australia has emerged at the centre of the allegations bexause of the Significant Investor Visa program, which offers an accelerated pathway for wealthy ­investors to gain permanent residency by investing $5 million in Australian bonds, funds or a small business. Chinese nationals account for nine out of 10 applicants since the program was introduced under the former Labor government.

Under China's stringent foreign exchange law, citizens are allowed to send only $US50,000 ($53,000) abroad per annum. Australia has been repeatedly mentioned as the destination of "grey money" coming out of China in relation to the visa ­program.

In the CCTV report, undercover footage shows the Australian national flag on a Bank of China stand at a busy emigration fair, advertising Australia as an important destination for investors. Social media posts from major media outlets about the story were featuring prominently a map of Australia.

"We don't care where your money is from or how you earn it, we can help you get it out of the country," a Bank of China employee is quoted as saying at the fair. "We don't care how black your money is or how dirty it is, we will find ways to launder it and shift it overseas for you."

Bank of China declined a request for comment.

It is understood the China Banking Regulatory Commission has intensified its investi­gation into money-laundering and has recently signed an agreement with US authorities that allows greater information-sharing about bank accounts.

The CCTV report accuses the Bank of China of money-launder­ing via a scheme called You Huitong, translated as You Uncapped, which lets wealthy Chinese circumvent Beijing's strict currency controls. "You Huitong is a shadowy business," CCTV says. "It is unbelievable that such a big bank is violating the law to fill its own pockets."

It is understood some private bankers from Australia's big four banks have been aware of the You Huitong service for a year. Media reports in November detailed allegations of Chinese businessmen using private jets to ferry suitcases of cash and deposit them at a Bank of China branch in Melbourne. A senior manager reportedly with one of the big four Aus­tralian banks told CCTV that the Bank of China was crucial to the bank's migration business. "The money is very safe and will leave the country in a very grey ­channel.

"The Bank of China is the same as an underground bank (a Chinese term for black market operators that launder money)," the unnamed official said. He said only the Bank of China could carry out operations on such a large scale.

BUSINESS SPECTATOR




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time."
- Dr John Hussman

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triage
post Posted: Jun 29 2014, 09:59 AM
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I think it is useful from time to time to step away from the daily flurry and take stock of where things stand.

For instance even the village idiot has caught on to the notion that China has been on a tear for the last three and a half decades, and if one is willing to use straight line extrapolations it is quite possible to conclude that China will become THE dominant force in the world sometime next week. And sure it is indeed possible for that to happen, if not soon than within our children's life-times. But in every single case when a developing nation attempted to transform into a super-power it either stumbled badly, as in the case of the US in the 1890's, 1930's and 1970's, or fell, as in the case of Japan, Germany, the USSR, and Argentina (remember in the 1890's it was Argentina, not the US, that was expected by many to emerge as the dominant force).

Here is an attempt to take stock of China's current position in the world. Basically the author argues that quantitatively but not qualitatively China is already there or thereabouts but that its current structure is such that it may be unable to address its qualitative weaknesses.

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This is the dangerous cocktail that many China watchers see gripping the country today. It is a sobering and daunting set of challenges for the people and government of China to tackle. Thus, observers should not blindly assume that China’s future will exhibit the dynamism of the past thirty years, or that its path to global-power status will necessarily continue.


http://nationalinterest.org/feature/the-il...ese-power-10739

This article reminds me of one written by a keen China watcher, Gerald Segal, just before his death (from cancer) in 1999. His argument back then was that China was not the really big thing that some in the west were assuming. The fact is that 15 years later China still has not stumbled or fallen but still has not transitioned out of being a regional power.

http://www.foreignaffairs.com/articles/554...es-china-matter

I'm not suggesting that either author got it right but both are worth a read imo.



--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

"It is the mark of an educated mind to be able to entertain a thought without accepting it." Aristotle
 
 


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