La Cina, i suoi economici guai, il suo sistema bancario fantasma. Come sue certe spose

by Edoardo Varini

Il portavoce dell'Istat cinese si chiama Sheng Laiyun, e non ricorderà la giornata di ieri tra le sue migliori. Perché gli è toccato di dire al mondo che il Pil cinese è giunto ai minimi da 18 mesi a questa parte: 7,4%. Ed anche altri dati non sono felici: -6,6% nelle esportazioni, -11,3 nelle importazioni, indice PMI a 48,3, sotto la soglia critica di 50, il che significa che i direttori degli acquisti – coloro che fanno gli investimenti per le aziende – non la vedono bene. E poi questa storia della liquidità che cala, del crollo dei nuovi prestiti. Poco più di un mese fa abbiamo avuto il primo fallimento di un corporate bond cinese, emesso da Chaori Solar Energy Science & Technology: i 14,7 milioni di dollari che servivano per onorare gli interessi non si sono trovati. La compagnia di navigazione Nanjing Tanker sarà cancellata dalla borsa di Shangai. Mai era accaduto ad una società sostenuta dal governo centrale, che però ora deve fare pur esso i suoi conti. Dunque il delisting, per 2 miliardi di dollari di debito: oltre quattro volte il patrimonio netto. Se qualcuno un lustro fa fosse venuto a dire che il livello di crescita cinese non era sostenibile gli avrebbero riso in faccia. Ora si è tutti appoggiati al parapetto ad attendere il riassetto, dolorosissimo, che condurrà l'economia del dragone dalla sovpproduzione e dalla completa noncuranza verso la sostenibilità ambientale alla sostenibilità, in tutti i sensi. Jumei.com è un rivenditore online di cosmetici. Un colosso cinese. Uno dei tanti, con sede a Pechino. Lo scorso anno ha fatturato 1 miliardo di dollari. Debutterà in borsa entro fine anno ma non a Shangai, a Wall Street. Le esportazioni cinesi, l'abbiamo visto, sono in calo. La crescita si dovrà dunque puntellare alla domanda interna. Chi la finanzia? Chi l'ha finanziata fino ad oggi? La Banca centrale, certo. Ma per la più parte il cosiddetto "shadow banking", che vuol dire "sistema bancario ombra", o "collaterale". Questo sistema ora concede prestiti chiedendo a garanzia materie prime. Ferro e rame stanno arrivando a fiumi in Cina, come mai prima. Con lettere di credito. Se però cala il prezzo dei metalli ti viene chiesto di rientrare. A quel punto ci devi riuscire. E non è per niente facile. Però qui siamo in Cina, dove se vuoi puoi sposare anche un fantasma. La cerimonia la chiamano minghun. In fondo "shadow" puoi tradurlo anche "spettro".

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Google testing dual support…that NEEDS to hold!

by Chris Kimble

CLICK ON CHART TO ENLARGE Google has created a quality rising channel and it broke above this channel last year and now is about to test it as support. As the same time a steep support line is coming into play, creating dual support. Support is support until broken. If support should not hold here, it would send a heck of a message to the tech sector! Stay tuned here!!!

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Crude market still worried about Ukraine

By Phil Flynn

Oil Cure! A surge in U.S. oil (NYMEX:CLK14) supply brought a sense of calm to the oil risk premium but based upon spreads the market is still worried about Ukraine. High-level talks are taking place in Geneva to try to find a peaceful resolution to the crisis. While Russian President Vladimir Putin speaks with inflammatory rhetoric there were some reported deaths of Russian separatists. Dow Jones reported "Russian President Vladimir Putin on Thursday accused the Kiev government of committing "a serious crime" by sending in troops to quell unrest in Ukraine's east, as a clash overnight left three pro-Russian protesters dead and 13 wounded. Ukraine has accused Russia of sending agents into the region to foment unrest, but Mr. Putin insisted that Russia has no forces present in the country." The stakes are high and the weekend will be long so it will be interesting to gage how the market will price the risk when it knows that whatever they decide will be locked in until trading once again begins. In a normal day the story would have been about the Energy Information Administration supply report and the fact that U.S. oil production hit the highest level since the 1980's. A 10 million barrel plus build the largest since 2001 caused the West Texas intermediate to back off and even brought down the Brent crude yet the risk spreads still widened. The Brent crude stayed stronger despite hopes for a return of Libyan oil back to the market. The impact of U.S. oil producing over 8.3 million, the most since April 1988 was clear and is raising  the question how refiners can take better advantage of this high yielding pure crude oil. Refiners ran at an impressive 88.8 percent which was up 1.3 percentage points from the last week and the highest level since January. Yet despite that effort a distillate inventory fell 1.28 million barrels to 111.9 million last week and gasoline stockpiles dropped 154,000 barrels to 210.3 million. Demand has been strong. Diesel demand should start too sure as farmers look to get in the field assuming the weather starts to warm and dry up. Gas demand while dropping last week has been strong on the four week average. Ethanol production also came roaring back rising 43,000 barrels per day hitting 93,000 barrels the highest weekly grind since early December. Soybeans (NYBOT:JSK14) also hit a 10 month high still riding the near record soybean-crush. Natural Gas will take the Stage as the EIA reports its weekly supply report. The market is looking for an injection that should come in around 33. We need to see a sign that producers are ramping up production in a big way or nerves will start to set in. Look to buy calls!

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Even The US Government Will Abandon the U.S. Dollar

By: Jeff_Berwick

For millions it is already too late. They won't realize the geopolitical winds which are now blowing.  Off in their own lala land, the average American will be focused on sports, celebrities, what the right amount of stealing (taxes) in society is, gay rights, which foreign countries "we" should bomb next, the first woman president, and so on and so forth, while their livelihoods are sacrificed in the name of the US government. They will wake up one morning, and their prospects will be gloomier than they are now. Don't think such a thing happens? This exact thing just happened in the Ukraine. Devastation. People wake up one morning and all the sudden everything they had worked so hard for is gone. "Oh, but that's Ukraine!" you might say. "Not here in the US." Well, when you realize that a lot of the policies now being instituted in Ukraine were supported by the US government and the International Monetary Fund, which is largely funded by the US government, then maybe, just maybe you will start to see things differently. If not, I understand. Public schools are not kind institutions to reason. If that's not reason enough just consider the growing police state. Jim Rogers recently discussed with Yahoo! Finance how all western governments are bankrupt, which we cover regularly, stating "There is no sound currency anymore...There's no paper money in 2014 and 2015 that's going to be worth much of anything." Bloomberg recently reported that the US dollar reached a two-year low, it's weakest level since November 2011. Furthermore, the US dollar has lost 38.5% of its value since 2002.  Rogers predicted the US will soon abandon the dollar for another currency! "For the first time in recorded history we have all major banks and central governments around the world printing huge amounts of money," Rogers said. "This has never happened in world history and so the world is floating on an artificial ocean... of lots and lots of printed money," said Rogers. "The debt is going higher and higher. The money printing is going higher and higher.  We've had 50 or 60 years of success in America," he said. "You've got to pay the price someday whether you like it or not. The longer you delay the day of reckoning, the worse the day of reckoning is going to be.  This is not going to be fun." THE SOLUTION "Abolish the Federal Reserve," Rogers stated. "The world has gotten along quite famously and well without central banks for most of world history." "America has had three central banks in our history, the first two disappeared," he said. "This one's going to disappear too because they keep taking on huge amounts of debt... they keep leveraging up the balance sheet... they keep making mistake after mistake... they're printing money, it's going to self-destruct before it's over...We'd be better off with no central bank than this central bank." EVERY LAST PENNY It's no wonder why the IRS, Social Security and Treasury are going after hardworking ordinary Americans. The government is flat out broke! They must simply get their hands on as much cash as possible, as quickly as possible, to delay the inevitable - US dollar abandonment and inevitable collapse. We reported last week how the Bureau of Land Management invaded Nevada in order to ready the land to be passed onto the Chinese. As you see, the US government is in so much debt, it is selling off parcels of land to creditors. But before it does that, it will have to go to war with the American people... Many government officials have confirmed the standoff there is not over and Ron Paul has warned against a WACO style siege. Then, just yesterday, we reported how Social Security and Treasury are stealing tax refunds to satisfy decade old debts...oftentimes parents' debts. (it turns out this recently was ceased until further investigation, a testament to how getting the word out can change things for the better) The feds are so desperate they are pondering taxing employee perks like free food at lavish cafeterias, laundry and even yoga. We here at The Dollar Vigilante know this information can be overwhelming. The sad thing is, we are not being hyperbolic. We cannot underscore in a daily blog the severity of the situation in which we find ourselves. CONCLUSION Something big is going on behind the scenes. Bankers are committing suicide or being murdered, and the finance minister of Canada just died. We are turning a corner and all of the debts and money printing is going to have a massive effect possibly as soon as this year, as Jim Rogers notes.  Precious metals have been in a consolidation period for years now, and TDV anticipated this and told our premium readers to go long cash, but now I personally am turning hyperbullish on precious metals, precious metals stocks and aggressive on shorting the overall stock market and I will write more about this in the April issue of TDV.  (For more information on our subscriber area,  click here.) Capital controls have been ratcheted up across the entire world. We've been covering the slow progression here, and with Foreign Account Tax Compliance Act coming into full effect July 1st, 2014, we believe we are in the final months when Americans can easily get their money outside of the US. If you have assets in the US, you're on the precipice of being too late! You should be running, not walking, to the lifeboats. Remember, even the US government will be forced to abandon the dollar.

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Russia's Ukraine Arsenal Includes U.S. Bonds

By Mark Gilbert

Figures this week showing that Russia has cut its Treasuries holdings to the lowest level since 2011 are a reminder that U.S. finances depend on the kindness of strangers. The U.S. government owes its foreign creditors $5.885 trillion, or roughly a third of the country's total public debt. The U.S. is now twice as reliant on foreign money as it was six years ago. Uncle Sam's overseas obligations have crept inexorably higher, as other nations have mopped up Treasury bonds for their foreign-exchange reserves. A 28 percent increase in 2008 was followed by 20 percent in 2009, another 20 percent in 2010, a relatively modest 13 percent in 2011, another deceleration to 11.3 percent in 2012, and a positively parsimonious 3 percent last year. Russia reduced its U.S. government bond investments to $126.2 billion in February, down from $131.8 billion the previous month and from almost $150 billion as recently as October, according to data from the U.S. Treasury department. It isn't likely that Russia has been dumping debt in retaliation against the sanctions imposed by the U.S. in response to President Vladimir Putin's annexation of Crimea. There is a chance, however, that Moscow is dipping into its savings to help fund its adventures in Ukraine; Russia just had its eighth bond-sale cancellation this year as investors shun its auction attempts. These days, geopolitical conflicts aren't just fought on battlefields, or indeed in cyberspace. As both Russia and Ukraine are finding, the currency and interest-rate markets offer new fronts on which wars can be fought. Which is why the magnitude of the U.S. reliance on foreign governments for funding should give pause. A relatively paltry $126 billion wouldn't give Russia much clout in the Treasury market even if it wanted to use it to retaliate against U.S. sanctions. Imagine, though, what might happen in the event of a confrontation between the U.S. and China. The $1.3 trillion of Treasuries in Beijing's back pocket might rapidly start to look like more like a weapon than an investment.

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‘Too big to fail’ is still a threat

by Martin Wolf

Opinion: the problem is not only the subsidy for bank risk-taking, it is also the likelihood of disasters “The total assets of a number of big banks have continued to soar: institutions with assets of $2 trillion are common. Such banks remain highly interconnected, though the extent of this might have diminished recently.” Photograph: Andy Sacks/Getty Images No solvent government will allow its banking industry to collapse. Leveraged institutions whose liabilities are more liquid than their assets are vulnerable to panics. In a panic, it will be hard to distinguish illiquidity from insolvency. These three points shape my views: the state stands behind banking even though it might not stand behind individual institutions. One of the obstacles to making the bearing of losses by creditors credible is “too big to fail” – the challenge posed by banks that are individually systemic. A question about post-crisis regulation is whether this risk is gone. The answer is no. Mark Carney, the governor of the Bank of England and chairman of the Financial Stability Board, agrees that “firms and markets are beginning to adjust to authorities’ determination to end too-big-to-fail. However, the problem is not yet solved.” No it is not, as a chapter on banks in the latest Global Financial Stability Report from the International Monetary Fund shows. “Subsidies rose across the board during the crisis but have since declined in most countries,” it concludes. “Estimated subsidies remain more elevated in the euro area than in the US. . . All in all, however, the expected probability that systemically important banks [SIBS]will be bailed out remains high in all regions.” Moreover, in another crisis, the necessary subsidies might jump once again. One reason is that the banking sector has tended to become even more concentrated. Furthermore, the total assets of a number of big banks have continued to soar: institutions with assets of $2 trillion are common. Such banks remain highly interconnected, though the extent of this might have diminished recently. Another reason is that the subsidies are still large. The IMF notes there are three different ways of assessing the subsidy. The first is from the difference between the interest rates on bonds issued by SIBs and non-SIBs. The second is a “contingent claims analysis”. The third comes from the analysis by rating agencies of the gap between the standalone rating and one allowing for state support. Comparisons between interest rates on bonds paid by SIBs and non-SIBs are quite tricky. Nevertheless, the contrast between US institutions with comparable leverage ratios (ratios of total assets to equity) reveals that the SIBs have a funding advantage. This confirms that the subsidy does indeed endure. The second approach is based on comparing observed spreads on credit-default swaps (a form of insurance on bonds) with fair-value spreads derived from prices of equities. The CDS spreads – unlike data from equities, whose owners are unlikely to be protected – take account of the probability of distress and the likelihood and size of government support. This method shows huge support during the crisis, which then declines in the US and rises in the UK and euro zone. The third approach is taken directly from estimates by rating agencies. This too shows that the subsidies are large, though slightly declining after the crisis. Reforms introduced after the crisis aimed at reducing the likelihood of state support seem to have increased the perceived riskiness of SIBs, just as the imposition of lower leverage ratios reduced it. Both outcomes were desirable. Yet the implied subsidies remain large – as high as $312 billion in the euro zone, on one approach. In terms of the funding cost advantage to SIBs the subsidies are at least 15 basis points in the US; 25-60 basis points in Japan; 20-60 basis points in the UK; and 60-90 basis points in the euro zone. It is hard to conceive of a good argument for subsidising these banks against smaller competitors. The only plausible argument is that banking systems dominated by a few large institutions might be more stable than competitive ones. This is not ridiculous: a well-organised cartel might be more stable than a large number of small competing banks. Yet if so this would clearly come at the expense of customers and the economy. It would be far better – and feasible – to take another route. So what is to be done? The IMF suggests three options: restrict the size and activities of banks; reduce the probability of distress; and lower the probability and size of any bailout if a bank becomes distressed. Of these, the second is best. While ringfencing of retail activities makes good sense, governments should not decide what private businesses do. On the third, commitments to limit the probability and scale of a bailout in the event of a systemic crisis are usually not credible. Given this, the best policy is the second: reducing the likelihood of a crisis. That can be best achieved by raising capital requirements and ensuring maximum transparency of balance sheets. This is even more vital if the aim is to safeguard the economy and the solvency of governments. Unfortunately, despite efforts in that direction, bank leverage remains too high. The US has now proposed a (non-risk-weighted) equity ratio of 5 per cent for large bank holding companies. But it is too easy for a bank’s assets to lose 5 per cent of their value. Funding by equity should be at least 10 per cent of the balance sheet and ideally more. At the very least, as the IMF suggests, equity should be raised until all measures of the subsidy are zero. Yet it is always the system, stupid. It would be quite wrong to suppose the chief problem is individual banks that are too important to fail. – (Copyright The Financial Times Limited 2014)

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