China Watch

[PS_RalphW]

wot fuzzy said.

Bit late to get into the BTL market (and NI is not like the rest of the UK - very heavily subsidised by central government taxation to stop the troubles exploding again).

My best suggestion, if you can do it tax and charges efficiently, draw down your pension pot and put the money in gold until you have enough to buy hard assets with steady post-crash income. As always, a high risk strategy.

Treat it like advise from some bloke on the internet. The hardest part is usually convincing your dependants who still buy the BAU line that it is in their best interests.

Look at your overall position - are you rural or city based? When the money runs out and old divisions raise their ugly head, are you going to be in the firing line? Is the local economy likely to be stable in a long term downturn?

No easy answers.

[Snail]

Nicole Foss wrote in one of the comments:

The UK, in particular, has nothing at all to fall back on. It’s future is nothing short of terrifying.

Gotta agree. The UK's stuffed. An economy based on financial trickery, a corrupt elite and system, and the prospect of massive migration.

[emordnilap]

Nicole Foss wrote in one of the comments:

The UK, in particular, has nothing at all to fall back on. It’s future is nothing short of terrifying.

Gotta agree. The UK's stuffed. An economy based on financial trickery, a corrupt elite and system, and the prospect of massive migration.

Ken!

[Snail]

I forgot

TPTSB - 'the powers that shouldn't be' will be used from now on

[kenneal - lagger]

It they're corrupt how can they be an elite? The elite of the corrupt? Surely that should be "the dregs of the corrupt!"

They're the Kleptocracy, a bunch of thieves, anything but elite?

OK! Em???

[emordnilap]

It's like trying to say "less than useless". Or "the height of depravity".

[Little John]

There is a much simpler and very much older term that encapsulates all possible conceptions of these people.

"ruling class"

They are a class of people in that they share sufficient interests in common with each other to be broadly identifiable as a class and, by a variety of economic, political and military means, they rule vast swathes of the world, directly or indirectly.

[kenneal - lagger]

They're not all "ruling". Many of them are just cheating us.

[fuzzy]

They are on the top - the scum..

[johnhemming2]

Compared to most people in the world you are most likely "on the top".

[kenneal - lagger]

Everything is relative, John. There's as much difference between the Kleptocracy and us as there is between us and the average African farmer.

For a good example of the Kleptocracy you only have to look at Donald Trump! If ever there was a reason to have prospective US presidents psychologically examined for fitness he is it. How could you call him one of an elite? The bloke's a nutter through and through!

[Little John]

They're not all "ruling". Many of them are just cheating us.

That's what I used the word "class"

[raspberry-blower]

Meanwhile, back in China the fecal matter has made contact with the fan in a spectacular fashion.

In case you missed the bleedin' obvious, Charles Hugh Smith has some background reading

0 years of torrid expansion, perhaps the single most consequential factor in China’s economy is how much of it is a “black box”: a system with visible inputs and outputs whose internal workings are opaque.

There are number of reasons for this lack of transparency:

1. Official statistics reflect what officials want to project, not the unfiltered data.

2. Policy decisions are made behind closed doors by a handful of leaders.

3. There is little institutional history of transparency.

4. Many important statistics are self-reported and prone to distortion.

5. Large sectors of the economy are informal and difficult if not impossible to measure accurately.

6. Endemic corruption distorts critical economic yardsticks.

7. There is little historical precedent to guide policy makers and individual investors.

None of these is unique to China, of course, with the possible exception of #7: few nations in history (if any) have experienced an equivalent boom in infrastructure, credit, housing and wealth in such a short span of time

Then there is the ACTUAL state of the Chinese economy. Cutting through the BS is Wolf Richter: China's hard landing just got harder

The manufacturing sector is responsible for much of China’s economic growth. It accounted for 31% of GDP, according to the World Bank. And a good part of this production is exported. But that plan has now been obviated by events.

Exports plunged 8.3% in July from a year ago, disappointing once again the soothsayers surveyed by Reuters that had predicted a 1% drop. Exports to Japan plunged 13%, to Europe 12.3%. And exports to the US, which is supposed to pull the world economy out of its mire, fell 1.3%. So far this year, in yuan terms, exports are down 0.9% from the same period last year. As important as manufacturing is to China, this debacle is not exactly conducive to economic growth.

What this state of affairs has resulted in is the flight of capital - the scale of which is unprecedented:

What is causing these persistent capital outflows? According to the People’s Daily, the official rag of the Chinese Communist Party, citing a banking industry researcher: “Market expectations of an appreciation in the US dollar” and worries about weak economic growth in the second half.


Despite the 7% GDP growth published and hotly defended by the Chinese government, it is increasingly clear that the country is beset with a host of immense problems, after a debt-fueled binge of overbuilding and over-stimulating. These problems aren’t going to evaporate. And whether or not the government is willing to admit it, they’re dragging down vast sectors of the economy.

Then yesterday, the PBOC acted

Wolf Richter PBOC freaks out and devalues Yuan by record amount , vows to "severely punish" capital flight

It lowered the yuan’s daily reference rate by a record 1.9%. The yuan plunged instantly, and after a brief bounce, continued to plunge. Now, as I’m writing this, it is trading in Shanghai at 6.322 to the dollar, down 1.8% from before the announcement. A record one-day drop.

The PBOC had kept the yuan stable against the dollar. As the dollar has risen against other major currencies, the yuan followed in lockstep. Over the past week, the Yuan’s closing levels in Shanghai were limited to vacillating between 6.2096 and 6.2097 against the dollar. Over the past month, daily moves were limited to a maximum 0.01%. The PBOC controls its currency with an iron fist.

Hence the shock to the currency war system

Not so much a parting shoot in the currency devaluation wars - more like a direct hit with a howitzer shell

While everyone else was trying to soothe market fears - the PBOC did it again:
Wolf Richter (again): Freaked out PBOC devalues yuan a second time, all hell breaks loose

It shook up the markets, pushed down metals, oil, other commodities, and emerging market currencies. The Nikkei plunged until the Bank of Japan’s muscled intervention put a floor under it. As part of its well-communicated QQE policies, the BOJ buys equity ETFs when stocks start dropping. Hedge funds expect it and start buying with the BOJ. It works like a charm. And then in the US, stocks swooned too.

That was Tuesday. It was a “one-time correction,” as the PBOC said, so the markets would adjust and get over it and move on to the next topic. Surely they’d find something to be enthusiastic about.

That theory fell apart Wednesday morning in China, just as everyone was getting ready to settle in, when the PBOC devalued the yuan again, this time by 1.6%, the second biggest cut in two decades after yesterday’s record. As I’m writing this, the yuan is down to 6.437 against the dollar in Shanghai trading.

That’s a 3.4% devaluation in two days!

It is clear that the PBOC has lost control and ipanic has set in.
This has already significantly impacted commodity prices - which had been on the decline anyway and there is a very real possibility that this could cause contagion in the bond market.

One country to keep an eye out for here - Japan. They are going to be caught in a maelstrom here - and their economy has been moribund since the 90s. The Yen could collapse catastrophically

[emordnilap]

It is clear that the PBOC has lost control and ipanic has set in.

Is that an Apple product launch?

[raspberry-blower]

It is clear that the PBOC has lost control and ipanic has set in.

Is that an Apple product launch?

How did you know?