Debt Rattle July 17 2015
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DPC Sternwheeler Mary H. Miller in Mississippi River floating dry dock, Vicksburg 1905 • If China Isn’t a Global Risk, What Is? (Pesek) • China’s Stat
[See the full post at: Debt Rattle July 17 2015]The Economist is wrong; debt is not worrisome. Rather, it’s necessary (that debt increase exponentially). At least it’s necessary to maintain the world the Economist desires.
“China has created what amounts to a state-run margin trader with $483 billion of firepower, its latest effort to end a stock-market rout that threatens to drag down economic growth and erode confidence in President Xi Jinping’s government.
China Securities Finance Corp. can access as much as 3 trillion yuan of borrowed funds from sources including the central bank and commercial lenders, according to people familiar with the matter. The money may be used to buy shares and provide liquidity to brokerages, the people said, asking not to be named because the information wasn’t public.
While it’s unclear how much CSF will ultimately deploy into China’s $6.6 trillion equity market, the financing is up to 25 times bigger than the support fund started by Chinese brokerages earlier this month.
CSF, founded in 2011 to provide funding to the margin-trading businesses of Chinese brokerages, has transformed into one of the key government vehicles to combat a 32 percent selloff in the Shanghai Composite from mid-June through July 8. At 3 trillion yuan, its funding would be about five times bigger than the new proposed bailout for Greece and exceed China’s 2.3 trillion yuan of regulated margin financing during the height of the stock-market boom last month.”
“China’s Communist Party leaders say they’re learning to love free markets.”
https://www.bloombergview.com/quicktake/chinas-managed-markets
Isn’t that a laugh and a half.
Ken – well, old Lloyd has done very well with debt: “Lloyd Blankfein is Now a Billionaire”.
“Blankfein, 60, was co-head of fixed-income trading when Goldman Sachs had its IPO, an event that created enormous wealth for executives. Partners in the firm received stock valued at an average of $63.6 million at the time of the sale. Henry Paulson, the bank’s CEO before and after the IPO, had almost $600 million of stock and options when he left to become U.S. Treasury Secretary in 2006, a move that allowed him to sell his stake without paying taxes.
Shares in the firm have climbed 298 percent since the IPO, compared with a 6 percent drop in the Standard & Poor’s 500 Financials Index. The stock has doubled in the past three years, reaching its highest level since 2007.
The guy tries to defend Blankfein in a way, saying, you know, all you have to do is stay with a company for a long time and – presto – you’re a billionaire. Yeah, some schmuck who safely keeps planes in the air over a long career, working his hands into arthritic pretzels, gets to live a decent life; no complaints.
But the guy who creates money out of thin air, bankrupts his company in 2008 (like the Chinese stock market, he was bailed out by the taxpayers), and helps Greece get into the Euro through very dubious means becomes a billionaire.
And the deal that Paulson got, paying no tax on his stock when he sold it, we all get that kind of benefit, don’t we?
Life is fair, isn’t it? You just need to work harder, people! It’s really all just about hard work (sarc).
“For six years, investors have been guessing how much gold China owns. On Friday, they found out and the results were underwhelming. China said it boosted bullion assets to about 1,658 metric tons, less than brokers at GoldCore Ltd. and Sharps Pixley Ltd. expected. […]
“I’m shocked by how small the figure is,” Ross Norman, chief executive officer of dealer Sharps Pixley, said by telephone from London, referring to China’s gold reserves. “I don’t think I was alone in thinking they have accumulated three times as much.”
More on Greece and the person who created the economy for the eu. Sad
What is always left unsaid about the Goldman Sachs swaps done by Greece is that it was not really a secret. Certainly the sophisticated in Frankfort, London, Paris and Brussels knew about it. How could they not?
This is the biggest crisis of the Obama administration. Well sure, Libya, Syria and now Ukraine are being destroyed due to unclear thinking by various factions of the foreign policy elites that Obama didn’t take the reins from since he defers to the elites to come to a consensus and that’s that. Even though he probably favored more conciliation in every case. but a few million ruined or ended lives don’t affect America.
His few words on Greece and Legards shouts from the IMF which is an arm of the US financial /government elites says this thing has gotten way out of hand but now it’s too late. Poor Merkel follows the same path, as all leaders of all Western nations do, let the elites hash things out, but her elites are not on the one Uncle Sams are. It’s a muddle.
On one level the events of the week, the total humiliation of Greece and the complete socialization of the stock market by China are stupendous victories for neo libererlism and the markets reflected that. At the same time it’s apparent that the government finance bubble (read Doug Noland, https://creditbubblebulletin.blogspot.com/p/credit-bubble-bulletin.html has been pierced. Stay tuned this isn’t over yet.
rapier – or you could say it’s been a total humiliation for the Troika and an utter humiliation for China because in each case the looters’ – I mean elite – debts have been socialized or in the process of being socialized, or not.
The curtain is pulled back like never before, and all are naked to see. Their swim trunks are around their ankles, and the whole world is now watching them cheat, lie and steal. They might end up with the money for awhile, but I’m sure they’ve seriously considered, in their quiet moments, what happens to thieves.
And, please, what market? There is no market.
Heard a report on NPR about a Greek family who grows olives and desires to market their own olive oil rather than sending it bulk to Italy. I think theirs is a cause worthy of support.
“One positive benefit you’d certainly expect to accrue to Greece from joining the euro is a big surge in how much trade it conducts with the countries it now shares a currency with. That’s exactly what happened. Compared to $4.5 billion in Greek exports to euro-area countries in 2000, before it joined, that figure rose to $11.2 billion in 2014.
The only wrinkle is that over the same period Greece increased its exports to non-euro countries by even more, from around $6.5 billion to nearly $24.8 billion, undermining a key argument in favor of creating a currency union in the first place.”
https://www.bloomberg.com/news/articles/2015-07-17/here-s-what-membership-in-the-euro-did-for-greece
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