Credit deflation and the reflation cycle to come (part 2)

[sancho panza]

16 minutes ago, JMD said:

His theory is that for the Chinese, apartments are not assets but consumables (the buildings will simply be re-built, forever).

Actually, I can see the awful logic in that actually happening - i've commented before that it is almost as if China had set out to design itself a system based on the worst extremes of both the USSR/Western-corporatism economic models.

Fine in theroy until they default on the loan,then it's an asset with a $300,000 loan on it,that's worth less than $100,000

[Harley]

5 minutes ago, sancho panza said:

Fine in theroy until they default on the loan,then it's an asset with a $300,000 loan on it,that's worth less than $100,000

Meanwhile we have cladding and all the graft associated with that sorry saga.

[Lightscribe]

3 hours ago, JMD said:

Talking of Science-'fiction'(is it?), i hear that the US Pentagon is releasing their awaited UFO report next month. Pressure's been mounting due in part from US pilots - who in recent years, have been increasingly coming forward to tell their weird close contact stories. Rumours abound that the report will contain controversial content. I just hope they won't be announcing that Fusion Tech has been solved, courtesy of our little green freinds!... The thing is the world might get its 'world peace', but our oilies would presumably go to zero?!... or am i just being selfish?

Lockheed Martin are working on their compact fusion reactor (CFR) for aircraft.

No doubt that all this media attention to UFOs at the moment is actually black project aircraft. There’s escalating tensions around the world at the moment and when that tends to happen, a bit of willy waving goes on. They’ll make sure they remind anyone watching, what they have without admitting they have it.

The TR3-B (apparently not it’s real name) is rumoured to be the evolution of Project Aurora. When a project apparently gets cancelled quickly that’s when it goes black.

Apparently not anti-gravity, but graphene coated with plasma charged leading edges that formulates a vacuum around the aircraft that enables high speed and change of direction.

There is also a fast mover aircraft dubbed the ‘Green Lady’ (successor to the SR-71) that supposedly uses a mixture of the JP7 fuel with Boron that leaves a green contrail so can be mistaken for a meteor and handily interferes with optical sensors.

I’ve had the pleasure of being able to see (and touch) both a SR-71 and a F-117 nighthawk in my time. Both former black projects and awesome examples of peak innovation at their time.

[JMD]

10 minutes ago, sancho panza said:

Fine in theroy until they default on the loan,then it's an asset with a $300,000 loan on it,that's worth less than $100,000

SP, do you believe the 'Chinese unwind' will be mostly characterised as being 'economic'? What i'm getting at is that most debt is owed to Chinese local government and the shadow banking system. Couldn't the national government issue Chinese bonds to soak up all the debt (and all the assets) in order to save (or at least stave off) their system from crumbling?

I think the CCP would rather unleash another cultural revolution on their people, before accepting they had failed or been defeated by the West. More strict social control would i think be their own way - and pretty much the ideal solution in CCP's mind - of 'kicking the can'? 

Could be totally wrong of course, but i just don't see things falling apart quickly as happened in the USSR. China knows where that leads, to an emasculated Russian state, etc. Eventually, yes the Chinese provinces would break apart (after all, some have different language/culture/internal allegiances), and the whole ('waxen faced') edifice would fail, but i think just not for several decades.

(who knows, warfare is changing, so this time might get a media/culture/cybertech 'low energy' type war fought between China and the West, where deaths are few and where 'collateral damage' to the Asian continent is minimized... one can but hope)

 

[Starsend]

4 hours ago, Harley said:

My issue is all the uranium stocks are low cap (sub £1B).  U.TSX is about CAD500m.  But that might change with the Sprott move, hence my particular interest.  I've been meaning to look at a fund too (from a podcast interview, the name escapes me).

Kazatomprom has a market cap of $3.5 billion if I recall correctly and is the largest uranium miner in the world. They pay an EXTRA JUICY 6% divi as well.

The share prices have had had a bit of a run up recently so worth waiting for dips. Long term hold for me. Also own Denison mines, Toronto exchange, market cap about a billion. 

You can't buy Kazatomprom on HL but you can Denison.

The ETF I like is the Global X Uranium, there's only a couple of uranium etfs. Not on HL.

[leonardratso]

and cameco

 

[Transistor Man]

2 hours ago, Lightscribe said:

Lockheed Martin are working on their compact fusion reactor (CFR) for aircraft.

 

He’s selling that!

Good luck to them, but no chance. On those timescales? No way. 

Ive seen these fusion guys in action. We had the head of NIF visit my work.... 15 years ago.

Gave a talk, said outright: it’s done, “Ignition” (self sustaining reaction) in a couple of months, just a case of turning the knobs up to 11. 

Never happened. Pretty big scandal. Guess what? The modelling was wrong! They left a term out of the equation.

When model and experiment deviated, they went with the model!

After that, it was used for material science and weapons research. 

The materials challenge is not solved. You get 14 MeV neutrons shooting out, which some how you have to deal with. Confining the plasma is incredibly hard too. 

(There are a couple of start ups in the UK doing similar things.)

great research work. Well worth doing. But he’s massively overstating where they are.

[Loki]

@Transistor Man Really interesting  post thanks, couldn't leave it at just a vote

[leonardratso]

1.21 gigawatts you say?

[macca]

On 19/05/2021 at 09:41, Cattle Prod said:

China is in a worse demographic position with less resources. It'll take time. The West is far from irrelevant imo, as I said it's still guarding the ME resources. I think China is screwed tbh, unless they reveal huge gold reserves or something.

China has the largest gold reserves in the world..

When you look at the flow of gold, all gold mined in China,, stays in China

China is the biggest buyer of gold..

They understate they're holdings as they don't want to crash the USD.. 

Not yet anyway.. they like a weak currency to export they're cheap crap..

No point being the worlds biggest manufacturer if your currency is to powerful 

all of china's money printing went into acquisitions in other countries resources, like 50% of Australia's water, Pakistan ports, Mongolian roads and mining ..etc

And massive infrastructure projects, vast cities and bullet trains and power grids..

In the west it all goes to the 0.7% offshore tax havens

[Mapper]

9 hours ago, ThoughtCriminal said:

Indeed. 

 

People object to IQ because the logical conclusion is that public policy can have very little effect. 

 

Throw in the prism of race to look through and everyone loses their shit. 

 

The Chinese weren't kidding when they they said may you live in interesting times. 🤦‍♂️

I don't know if this is 100% accurate, but I read that an IQ of under 70 indicates mental disability.

 

[wherebee]

News from down under - about 4 years since the last such rise

Commonwealth Bank has called the bottom on ultra-low rates, hiking its three and four-year fixed mortgage rates, with industry experts saying more banks will soon follow. 

The bank raised both its three and four-year fixed rates by 0.05 per cent on Friday.

This leaves Commonwealth Bank’s three-year fixed rate at 2.19 per cent and its four-year fixed rate at 2.24 per cent.

[macca]

Who do you guys use to buy your gold and silver stocks? 

As they are registered in the US my broker does not offer them.. 

How do I invest from the UK? 

[BurntBread]

One of the financiers posted many pages ago made an interesting remark about the structure of the 2000 market crash. We have talked about it before, but it's just come back to mind. He said that it didn't happen all at once. Early in the year, some of the small-cap dot-coms faltered, but the broader market didn't notice. Then some of the mid-caps got "taken out to the woodshed", but the market still powered on for a few more weeks, regardless. I wonder whether the current crypto downturn is the 2021 equivalent of "small-cap dot-coms"?

[ThoughtCriminal]

1 minute ago, BurntBread said:

One of the financiers posted many pages ago made an interesting remark about the structure of the 2000 market crash. We have talked about it before, but it's just come back to mind. He said that it didn't happen all at once. Early in the year, some of the small-cap dot-coms faltered, but the broader market didn't notice. Then some of the mid-caps got "taken out to the woodshed", but the market still powered on for a few more weeks, regardless. I wonder whether the current crypto downturn is the 2021 equivalent of "small-cap dot-coms"?

It certainly has a different feel to it this time. There seems to be major manipulation going on with this fall. 

[Lightscribe]

8 hours ago, Cattle Prod said:

SR-71 was on my wall as a boy, astonishing aircraft. I still can't believe it was designed to leak fuel on the runway. Those chines ...

Here’s some pictures of my visit to RAF Duxford CP. Well worth a visit.

 

[Stinky Wizzleteats]

7 hours ago, macca said:

China has the largest gold reserves in the world..

When you look at the flow of gold, all gold mined in China,, stays in China

China is the biggest buyer of gold..

They understate they're holdings as they don't want to crash the USD.. 

Not yet anyway.. they like a weak currency to export they're cheap crap..

No point being the worlds biggest manufacturer if your currency is to powerful 

all of china's money printing went into acquisitions in other countries resources, like 50% of Australia's water, Pakistan ports, Mongolian roads and mining ..etc

And massive infrastructure projects, vast cities and bullet trains and power grids..

In the west it all goes to the 0.7% offshore tax havens

 In the podcast i referred to upthread Dominic Frisby speculated that China would use their gold reserves to launch a gold-backed government crypto 

BBC are currently playing Inner City Blues by Marvin Gaye and these lyrics leapt out at me:

Inflation no chance
To increase finance
Bills pile up sky high
Send that boy off to die

[Bricormortis]

2 hours ago, macca said:

Who do you guys use to buy your gold and silver stocks? 

As they are registered in the US my broker does not offer them.. 

How do I invest from the UK? 

Many online platforms would do this, Hargreaves for sure. But not all the smaller co's.  Most of the stocks mentioned on here are available from Hargreaves Lansdowne.

[spygirl]

16 hours ago, sancho panza said:

The Chinese unwind ie when the leverage in the system blows will be epic.A lot of people who thought they were rich will be poor and a lot of people who were poor,will be even worse off.There will be laons on these flats that are being marked at par that will default

So basically,they regulated the banks so harshly that the Shadow banks stepped in to provide loans-and take their cut-thereby guaranteeing that if the intended purpose was to restrict bad lending,then the CCP's only success was to get someone even more unrelgulated to do it.

I've highlighted a few key phrases below

 

https://en.wikipedia.org/wiki/Shadow_Banking_in_China

Shadow banking in China is identified to have first emerged in the late 1990s, however its rapid growth did not come until the period following the GFC in 2007.^[3] It is documented that the growth in shadow banking activity was due to the inability of the traditional banking system to meet the spike in demand for funding, due to tight regulation on lending.^[4][2] It is estimated that in the period of 2010-2012, non-financial intermediaries in China grew at a rate of 34% per year.^[3]

Some of the key reasons individuals and companies engage in shadow banking include, but are not limited to:

• an insufficient supply of credit from the four major banks;
• regulatory limitations around risky loans and finally;
• a failure from regulators to limit the capacity for regulatory arbitrage;
• inter-bank interactions exclusion from credit management; and,
• the Chinese government's control over interest rates.^[5][2][3]

In the past, other reasons have been identified, including the reserve ratio requirement of 75% for banks loans to their deposits, and regulatory discouragement of lending to certain industries.

The Chinese shadow banking is distinct in that China has a bank-dominant financial system, and unique regulatory constraints on credit lending. This means there are more barriers to accessing lines of credit for Chinese businesses and individuals.^[6] Banks are also responsible for issuing financial products and dealing with the funds and profit associated with these. As well, it is primarily driven by domestic institutions, rather than foreign investments and entities, as is usual in shadow banking activity in other countries.^[5] In China, where banks are discouraged from lending to certain industries and are mandated to offer frustratingly low interest rates on deposits, non-banks fill the gap. About two-thirds of all lending in China by shadow banks are "bank loans in disguise".^[7]  One of the controversies of this industry is that retail investors are largely unsure about what sorts of risks they are taking on when engaging in shadow banking.^[8

 

Removal of the Reserve Ratio

The Reserve Ratio was a Chinese commercial banking law that stipulated banks could only lend a maximum of 75% of their capital deposits at any one time.^[19] This policy was adopted in 1995 and was designed to prevent rapid growth of commercial bank's credit scale in order to control liquidity risks.^[19] Reserve Ratio requirements are identified as one of the key reasons financial institutions engaged in shadow banking, in order to loan out money above the 75% cap, without these loans showing up on their balance sheets. The removal of the Reserve Ratio requirement by the National People's Congress took effect in October 2015.^[19] This move was considered to be both an effort to stimulate economic growth and decrease shadow banking loans by freeing up banks to loan out the rest of their capital through conventional avenues.

 

Ill be honest - I dont have a fucking clue about the state of Chinas economy.

If all the highly paid economist and commentators were honest then they say the same.

Everything  will be gamed to make the CCP look all knowing and powerful. Until it cant and crashes down.

My guess is that China will have have accelerate version of the US/West from Bretton woods in the 70s, oil crisis, banking crisis, mass fraud etc etc all within ~10 years.

 

 

[planit]

2 hours ago, Stinky Wizzleteats said:

 In the podcast i referred to upthread Dominic Frisby speculated that China would use their gold reserves to launch a gold-backed government crypto 

BBC are currently playing Inner City Blues by Marvin Gaye and these lyrics leapt out at me:

Inflation no chance
To increase finance
Bills pile up sky high
Send that boy off to die

I have thought about this but the problem is how could anyone trust China? They would be worse than Facebook tracking all the transactions and they could change their mind at any time on any of the parameters.

And that is after assuming they can set it up with some oversight that people could trust.

[JMD]

10 hours ago, Mapper said:

I don't know if this is 100% accurate, but I read that an IQ of under 70 indicates mental disability.

 

Re your question, yes the 70 IQ stat is accurate, but the whole topic gets a very grissly (maybe just look up IQ's for indiginous people). My view btw, is that intelligence is only one of many human factors, and basically, 'so what'? (thread derailment, topic not for this thread) 

But what did strike me about that interview was:                                    Interviewer: 'Is it difficult to train people to be creative, adaptive, problem solvers?'                                                                          Peterson: 'Its impossible! You cant do that.'

...Nuff said, mike-drop moment, etc, etc........  Except in today's world, even the premise of measuring intelligence , and IQ in particular, is questioned by those on the Left as being racist, etc. The above interviewer's 'retarded' question shows how 'distracted by dogma' many have become. 

[Stinky Wizzleteats]

56 minutes ago, planit said:

I have thought about this but the problem is how could anyone trust China? They would be worse than Facebook tracking all the transactions and they could change their mind at any time on any of the parameters.

And that is after assuming they can set it up with some oversight that people could trust.

Yes the privacy/human rights issues are potentially very grim. But Dominic's point was that China want to be the first to issue a Central Bank Digital Currency, and have it backed by gold in order to knock the dollar off its perch

[Ma2]

Apologies for missing the rest of the discussion on China, some great insights from everyone.

Just listened to the latest End Game podcast which had Peter Zeihan talking geopolitics, fascinating stuff for anyone who subscribes.

Some points from memory, so please challenge -

• Doesn't see China anywhere near as strongly positioned as is the general perception (due to propoganda)
• Chinese navy only ever set up for invasion of Taiwan, not strong enough for anything else
• Believes this invasion will not happen due to Taiwanese know-how and nuclear ability on the quiet
• US Navy alone could blockade and starve China of oil for a month or so which would see collapse
• China has no friends
• Beijing will just keep on down the current road until it starts falling apart, but just keep ignoring it, ramping up the propoganda and control where it can. See no other course of action available to CCP.
• Eventually North and South possible split, unified China being an anomaly historically anyway

[JMD]

On 19/05/2021 at 20:20, Transistor Man said:

Michael Kao, interesting macro thread:

 

Kao raises some interesting points - Does social chaos automatically need to follow when the economic chaos finally hits the fan? He contrasts the unique Weimer political breakdown (ott competing ideologies, socialism being violently born), plus the inherent/inbuilt inflation caused by unattainable reparation targets - leading to ultimate massive economic failure; And compares this to Japan's cohesive society/'don't panic' attitude, and their managed economic decline over 30 years.                                                                                                               Personally, i never bought into the preper fears. Moreover, have we not recently kinda actually 'run the experiment'; i.e. didn't we see the total public acquiescence in the face of government cosy-containment/covid-control measures? 

So perhaps a Weimer/Japan mashup? (insert your own jokes!), but both positives and negatives?... depends how you look at things i suppose!?

[spygirl]

1 hour ago, JMD said:

Re your question, yes the 70 IQ stat is accurate, but the whole topic gets a very grissly (maybe just look up IQ's for indiginous people). My view btw, is that intelligence is only one of many human factors, and basically, 'so what'? (thread derailment, topic not for this thread) 

But what did strike me about that interview was:                                    Interviewer: 'Is it difficult to train people to be creative, adaptive, problem solvers?'                                                                          Peterson: 'Its impossible! You cant do that.'

...Nuff said, mike-drop moment, etc, etc........  Except in today's world, even the premise of measuring intelligence , and IQ in particular, is questioned by those on the Left as being racist, etc. The above interviewer's 'retarded' question shows how 'distracted by dogma' many have become. 

Theres nothing new in what he says - 10% of the population are slack jawed morons.

And the bottom ~20% are  not suited to the tasks that the US army requires them to do - they need to be smart enough to do task but not too smart to think about it too much.

Talk a UK army recruiter and ask them about the state of the people they reject.

 

Thats always been the case. And its pretty obvious if you have to deal with a large number of the general population.

My classic moron filter is 24h time tables. In my train travelling days, before elecstric signs, there was always large nubmer who could not work out the time afetr midday.

 

In my experience - 

About 10% of the UK adult population cannot read anything, Totally illiterate

About another 20% cannot follow written instructions - think TV instructions.  Everything - and I mean every task - has to be shown to them until they grasp it.

This does raise the issue of how much money the UK is wasting in education.