[Bernard L. Madoff]

This is gold and should go MSM.

http://www.zerohedge...n-vacant-homes-

[boz]

Bernard L. Madoff, on 15 July 2010 - 04:28 AM, said:

This is gold and should go MSM.

http://www.zerohedge...n-vacant-homes-

that is 5% of population in China, doesn't mean much considering China has 3+ times population of US, also considering 10% of homes are empty in australia and we have a shortage...

[Bernard L. Madoff]

boz, on 15 July 2010 - 10:10 AM, said:

that is 5% of population in China, doesn't mean much considering China has 3+ times population of US, also considering 10% of homes are empty in australia and we have a shortage...

Sorry?

65 million empty houses is what? You don't think building empty shopping malls, suburbs, high rises etc is bizarre?

The population of Beijing is 22 million.

The crux of the bubble is the real estate is overvalued to incomes. Bit like the empty apartments, condos in the North Shore, Gold Coast etc are overvalued.

Pretty pointless the Chinese building all this sh*t and no one can use it at current prices.

[Bernard L. Madoff]

For those that couldn't be arsed reading the doc in the link here is a copy...

 Fitch-on-Chinese-Banks-7-2010.pdf (268.12K)
Number of downloads: 2

[boz]

Bernard L. Madoff, on 15 July 2010 - 01:11 PM, said:

Sorry?

65 million empty houses is what? You don't think building empty shopping malls, suburbs, high rises etc is bizarre?

The population of Beijing is 22 million.

The crux of the bubble is the real estate is overvalued to incomes. Bit like the empty apartments, condos in the North Shore, Gold Coast etc are overvalued.

Pretty pointless the Chinese building all this sh*t and no one can use it at current prices.

I am just saying that probably because of its size 65 mil homes empty in China is not as bad as it looks like, don't forget they are 1 bil people in china, an occupancy rate like australia of 2.4 would imply 400 mil homes over there, 65 mil less homes is an occupancy of 3, so when you get a gdp growth of 10% like in China a 0.6 movement in occupancy rate is possible. Still they probably have a housing bubble probably not because of too many empty houses but because too much of gdp is related to construction. But I might be wrong as I haven't studied too much about china

[Bernard L. Madoff]

More on the dodgy Chinese banks and speculation. This US banks sub-prime deja vu.

Quote

BEIJING (Caixin Online) -- Despite regulatory directives aimed at preventing banks from removing loans off their balance sheets to dodge credit restrictions, China's banks did not slow down their pace in packaging loans as wealth management products.

Banks and trusts cooperated on wealth management products, effectively allowing them to shirk their responsibilities toward credit limits imposed nationwide under the central government's macroeconomic controls.

In the first half 2010, according to trust company reports, the value of wealth management products cooperatively offered by banks and trusts rose to 2.6 trillion yuan ($380 billion), topping the previous year's 1.77 trillion yuan.

This amount -- combined with the 4.58 trillion yuan in on-the-books, new credit issued by banks in the first half -- brought total lending in China through June 30 to near the 7.5 trillion yuan limit set by the government for all 2010.

"Banks have been fervent (lenders) during the past two months," explained one official at the China Banking Regulatory Commission (CBRC).

http://www.marketwat...tors-2010-07-15

[urchin]

dunno if anyone has posted it yet, but this is a pretty stark view of the chinese situation. obviously the reporter is not buying into the "nothing to see here" line of the chinese gov't...

Link

Quote

Tianjin Says `Wait a Minute!' to Wen as China Property Slumps
By Bloomberg News - Jul 20, 2010Three dozen cranes tower over the Tianjin West Railway Station, part of a 501-billion yuan ($74- billion) government-funded building boom in this city of 9.8 million southeast of Beijing.

Like hundreds of other local Chinese projects, Tianjin’s construction is financed in part by land sales that are dropping as China’s real-estate slump takes hold. Property sales slid at an annual 8 percent rate in June. Selling land produced 41 percent of Tianjin’s income last year, according to China Index Academy, a Beijing real-estate research firm.

A cascading collapse in local finances could force the central government to shore up banks that lent to local government entities, said Jim Walker, chief economist at Hong Kong-based Asianomics Ltd., in a June 7 interview. Banks could “easily” be saddled with bad loans of more than $400 billion over the next two years, he said.

“These local-government vehicles probably hope their projects will be able to service their debts,” Walker said. “If they don’t I doubt they’ll worry about repaying the loans; they will just assume that somewhere else in government will have to take on the bad debt.”

After their success in propelling growth, local authorities are now faced with the consequences of Premier Wen Jiabao’s crackdown on the real-estate bubble. Falling property sales risk an erosion of revenue accounting for as much as 30 percent of local budgets, according to Standard Chartered Bank. [Sounds a lot like Canberra!]

Must Do Something

The China Se Shang Property Index has tumbled 42 percent in the past year, underperforming the 23 percent drop in the benchmark Shanghai Composite Index.

“Local governments were encouraged to invest in these projects and now they’re feeling like, ‘Hey, wait a minute!’” said Barry Naughton, author of the 2007 book “The Chinese Economy: Transitions and Growth” and a China specialist at the University of California San Diego. “They will be taking their funding platforms to Beijing and saying: ‘We’re going to go bankrupt. You have to do something about it.’”

China has more than 1,000 county-level governments and hundreds of city and municipal councils that get revenue from local taxes, land sales and central-government transfers. Authorities sold or allocated 319,000 hectares (788,266 acres) of property last year, up 44 percent from 2008, netting a record 1.6 trillion yuan, Ministry of Land and Resources data show.

Economic Engine

Wen’s government aims to make Tianjin’s Binhai New Area an economic engine akin to Hong Kong neighbor Shenzhen and Shanghai’s Pudong. Tianjin reported 180.5 billion yuan in revenue last year. While the data don’t detail land sales, China Index Academy estimates the receipts at 73.2 billion yuan, a 67 percent surge over 2008.

A Tianjin Bureau of Land Resources and Housing Administration spokesman who identified himself as Mr. Duan said by telephone in response to questions about the city’s land sales: “Healthy, stable and in good order,” declining to comment further.

Duan’s assessment contrasts with National Bureau of Statistics figures last week that showed real-estate sales across the country fell for a second straight month in June compared with a year earlier.

The reversal comes amid a slowdown across the world’s third-largest economy. China’s expansion cooled to an annual pace of 10.3 percent in the second quarter, according to data released last week, from 11.9 percent in January to March.

More Slowing?

The growth rate for industrial production in June dropped the most since 2008, excluding distortions from the Lunar New Year holiday, signaling a further deceleration in the economy in the second half of the year.

Policy makers are seeking to cushion the decline in property by promoting low-cost housing, a strategy that itself is complicated by newly falling prices.

“What we’re likely to see is that local governments will hold onto the land and wait until prices are reasonable before supplying it,” said Ren Zhiqiang, chairman of Beijing-based developer Huayuan Property Co. Ltd., at a forum in Beijing on July 12.

Sales of land for residential use in 103 cities in China dropped 28 percent in June from May, China Index Academy said in a statement on July 13. Shenzhen-based developer Gemdale Corp. saw first-half contracted sales fall 37 percent to 5.4 billion yuan and 43 percent by area to 482,900 square meters, according to a July 10 statement.

JPMorgan Chase & Co. cut its profit estimates for China’s property developers by an average 9 percent in 2010 and 11 percent in 2011 due to a “substantial slowdown” in transactions, analysts led by Raymond Ngai wrote last month.

State-Owned Banks

Beijing-based hedge fund manager Jenny Tian is avoiding state-owned banks, including China Construction Bank Corp., Industrial & Commercial Bank of China Ltd. and Bank of China Ltd., because of concern over the credit they’ve extended to local authorities. The Springs China Opportunities Fund she helps manage has bought bank stocks that include China Merchants Bank Co. and China Minsheng Banking Corp., which have smaller amounts of such lending, she said.

Lending by China Merchants to local governments makes up about 5 to 6 percent of its total outstanding loans, while China Minsheng’s total is 6 percent to 7 percent, Tian said. Big state banks’ lending is between 15 to 20 percent, she calculates.

Barclays Capital forecasts China’s property prices may fall as much as 30 percent in the next 12 months. Kenneth Rogoff, the Harvard University professor and former International Monetary Fund chief economist, said in a Bloomberg Television interview July 6 that a “collapse” in real estate is beginning.

More Than India

The threat facing China’s local governments is another shock wave stemming from the global financial crisis and policy makers’ response to it. As credit froze in the wake of Lehman Brothers Holdings Inc.’s collapse in late 2008, China encouraged a lending spree to cushion the economy. A record 9.6 trillion yuan of loans was issued in China in 2009, more than India’s gross domestic product.

Some local governments set up vehicles to circumvent rules that prevent them borrowing directly. Total local government outstanding debt last year rose to a record 11.4 trillion yuan, according to calculations by Victor Shih, a political economist at Northwestern University in Evanston, Illinois, who has spent months researching local government finances.

The borrowing has effectively pushed China’s overall debt to 71 percent of GDP, Shih said. By comparison, the IMF sees Spain’s ratio this year at 66.9 percent, the U.S. at 93 percent, and Greece at 133 percent. Its estimate for China excluding local-government liabilities is 20 percent.

Overstated Crisis?

Talk of a local debt crisis in China is “overstated,” said Ha Jiming, Hong Kong-based chief economist at China International Capital Corp. He tallies the nation’s total debt- to-GDP ratio as 43 percent, “still one of the world’s soundest.”

Home prices are set to fall as much as 20 percent in a “healthy” correction, Michael Klibaner, head of China research at property broker Jones Lang LaSalle Inc. in Shanghai, said July 7. The property boom has been driven by cash rather than debt, meaning there’s little chance of the forced selling that exacerbated the U.S. housing-market collapse, he said.

Shih said that some local governments are so stretched that “if they don’t sell land within a few months they may have to choose between paying salaries and pension benefits and paying interest payments to the bank.” He identified Tianjin, Chongqing and Wuhan as cities “with higher levels of leverage.”

Special Vehicles

In Tianjin, credit to special financing vehicles last year reached more than 700 billion yuan, according to Shih. Tianjin’s units have also lined up an additional 840 billion yuan in credit lines with banks, he said.

Construction of the 180,000-square-meter Tianjin West Railway Station and transport hub, which will include a 1.3 billion yuan underground link to nearby Tianjin Railway Station, helped propel the city’s economy to a 16.5 percent growth pace last year. The challenge for local leaders will be to sustain that without the bump from land-sales financing.

“To imagine a situation where eventually Tianjin is able to repay all of its debt, you have to believe that it will grow at a phenomenal rate,” said Shih. “There are aspirations and there’s reality.”

--Kevin Hamlin. With assistance from Li Yanping, Vincent Ni and Dingmin Zhang in Beijing and Malcolm Scott in Sydney. Editors: Chris Anstey, Anne Swardson

To contact the Bloomberg News staff on this story: Kevin Hamlin in Beijing on khamlin@bloomberg.net

[Bernard L. Madoff]

urchin, on 21 July 2010 - 04:15 AM, said:

dunno if anyone has posted it yet, but this is a pretty stark view of the chinese situation. obviously the reporter is not buying into the "nothing to see here" line of the chinese gov't...

Link


[b]

Nice find suh!

[booboo]

I also enjoyed the following article, taking a dig at the Western ratings agencies and the US' huge and unsustainable debt first, then on China "the land of bubbles" second.

http://www.smh.com.a...0721-10l97.html

[Bernard L. Madoff]

Hows that Yuan looking Mr Geithner, Mr Bernanke?

Quote

LOS ANGELES (MarketWatch) -- China will let its currency fall if needed to support exports, a Chinese central bank advisor said in an interview published Wednesday.

"Now that there is flexibility in the renminbi, the exchange rate of the currency will decline if it becomes necessary to support exports," Zhou Qiren said in an interview with Japan's Asahi Shimbun.

After almost three years of keeping its currency -- known both as "renminbi" or "yuan" -- tied to the U.S. dollar, China last month began allowing the yuan's daily trading band to fluctuate.

Zhou, a member of the People's Bank of China's top advisory committee, said that Beijing's top focus was keep the exchange rate relatively stable, in part to avoid harming the nation's key export sector.

http://www.marketwat...down-2010-07-21

[Bernard L. Madoff]

Quote

July 24 (Bloomberg) -- Chinese banks may struggle to recoup about 23 percent of the 7.7 trillion yuan ($1.1 trillion) they’ve lent to finance local government infrastructure projects, according to a person with knowledge of data collected by the nation’s regulator.

About half of all loans need to be serviced by secondary sources including guarantors because the ventures can’t generate sufficient revenue, the person said, declining to be identified because the information is confidential. The China Banking Regulatory Commission has told banks to write off non-performing project loans by the end of this year, the person said.

http://www.businessw...lion-loans.html

[Bernard L. Madoff]

The Ponzi Dragon is unravelling...

http://www.marketwat...oans-2010-08-08

http://www.cbrc.gov....F1D7A86E0D75200

[Bernard L. Madoff]

The Mother of All Bubbles

[boz]

Bernard L. Madoff, on 09 August 2010 - 09:13 AM, said:

The Mother of All Bubbles

don't think they've got the mother of all bubble. china has massive potential improvement in productivity and to GDP growth, latest m2 money supply in china is 17.6% data of this week and hasn't been over 20 for over 6 months, it did peaked at 30% last year after the stimulus but was only for few months. Now you get also 10% of GDP growth, 5% of PPI inflation and 3.5% of CPI inflation, these are not bubble numbers. The tricky thing is weather China can grow the production with global demand sluggish and weather they can sustain 10% growth for long.
The chart about housing value against gdp is not that important (by the way australia is also at 4 times), country with high saving rate have higher number (like in europe) and only a high number followed by low saving rate is dangerous

[Bernard L. Madoff]

A very very interesting post from Mish...
http://globaleconomi...s-18-lower.html

[Bernard L. Madoff]

Woooo Hooooo

Quote

A few minutes ago the Dow Jones released the following: "The Bank of Japan will consider taking additional easing steps to cope with a rising yen and falling share prices, the Sankei Shimbun reported in its morning edition." The BOJ will hold an emergency meeting policy meeting at 5 am GMT at which point the specifics of the easing measures will be announced.

http://www.zerohedge...cted-nikkei-sp-

[Mr Medved]

Bernard L. Madoff, on 19 August 2010 - 08:31 AM, said:

Woooo Hooooo



http://www.zerohedge...cted-nikkei-sp-

Buy AUD/JPY?

[Bernard L. Madoff]

Mr Medved, on 19 August 2010 - 10:36 AM, said:

Buy AUD/JPY?

If the carry unwinds in panic? It'll go the other way. I'll stay out - its unchartered territory.

They are cactus lost decade two decades half century.

I'm amazed that the Americans are following their early 90s lead.

[tor]

Bernard L. Madoff, on 19 August 2010 - 11:36 AM, said:

I'm amazed that the Americans are following their early 90s lead.

If you were in charge and had caused the problem you might be feeling a little like you can't trust your own ideas as they caused the mess.

Perhaps you might be feeling like if you do anything you'll make it worse. Copying Japan at least means you have a chance of having a lost decade rather than a return to mud huts.

[Plonk]

This has probably been posted somewhere else, but here it is again- China is releasing CPI/PPI et al data on a Saturday as a special treat:

http://www.marketwat...kend-2010-09-10

Saturday surprise- what's in the goody box?