johnthebear

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  • U.S. Credit Woes Spill Into China
    Thanks for your info.

    Have you heard much about non-performing commercial and industrial real estate loans in China?

    What do you expect to happen to the China economy over the next 6 months?
    Aug 29 09:21 am |Rating: 0 0 |Link to Comment |View article
  • China's Looming Hangover?

    I understand that factories are closing, exports slowing and unemployment is growing. The news in China is probably so controlled that the public does not yet understand that they will be a part of the growing global crisis. The excitement of the games has put the country in a trance, ignoring what is happening in the big picture.

    By October, I expect to see SSEC and FXI down another 50%.

    China has huge over capacity and I just read that their biggest bank was last bailed out only 3 years ago, and is now selling subordinated bonds to raise capital. They say the sale is to have capital available to take advantage of opportunities in our fallen markets, but I suspect that they have loan losses they are trying to cover to their political buddies. Rather than mark-to-market like our banks have done, they can hide their loses very easily with no voters to worry about. Obama would fit in real well there.
    Aug 22 02:13 am |Rating: 0 0 |Link to Comment |View article
  • Six Reasons To Buy China Soon
    The following should help shed some light on the question: I agree with Mr. O'Brien's analysis.

    In my view, China may be down a couple of years, just like the rest of the world. Then it would be the time to buy China, but not now.

    China's Negative Economic Outlook

    by: Kevin O'Brien posted on: July 02, 2008 |

    Certain recent developments in conjunction with prevailing global economic trends appear sufficiently serious to warrant a current economic assessment of the People’s Republic of China [PRC] and a review of China’s sovereign credit risk.

    U.S. ECONOMIC TRENDS

    The U.S. economy is experiencing a significant contraction as U.S. consumer spending continues to decline. Housing prices have plummeted as the rate of both residential and commercial mortgage delinquencies continues to increase. At the end of the first quarter of this year, nearly nine million borrowers held mortgages exceeding the value of their homes, and this number is expected to increase significantly. The U.S. economy shed 80,000 jobs in March according to the U.S. Department of Labor, the largest loss in five years. Average U.S. household debt is 85% higher than in 2001, and continues to increase as consumers take on greater levels of debt in response to rising commodity prices, particularly food and energy costs. Delinquency and default rates for credit card debt, automobile loans and student loans continue to rise rapidly, as delinquencies have increased from less than $300 billion in 2005, to $715 billion in 2008; representing an increase of nearly 150% within 36 months. The present economic stress will likely be compounded by an expected record number of bank failures. U.S. consumer spending is predicted to continue to decline as consumers experience increasing commodity price inflation and credit contraction.

    In a report dated May 19th, Oppenheimer analyst Meredith Whitney warned:

    The real harrowing days of the credit crisis are still ahead of us and will prove more widespread in effect than anything yet seen. Just as strained liquidity pushed so many small and mid-sized specialty finance companies to the brink, we believe it will do the same to the U.S. consumer. We believe losses will only accelerate further and far worse than the most draconian estimates.
    Ms. Whitney also estimates about $2 trillion of credit card lines will be removed by 2010, cutting the credit available to U.S. consumers by nearly half.

    CHINA’S ECONOMY DEPENDENT ON U.S. CONSUMER SPENDING

    The significance of the negative short- and mid-term U.S. economic outlook is especially troubling to China’s export sector, which is the primary hard currency earnings producer for the Chinese government. As U.S. consumer spending continues to retreat, the economic effect is anticipated to produce severe structural pressures on China’s export-driven domestic economy due to significantly decreasing external demand.

    PERVASIVE INFLATION IN CHINA’S DOMESTIC MARKET

    China’s economy continues to experience pervasive inflation which is particularly manifest in such consumer sensitive sectors as energy (e.g., petroleum prices which have more than doubled over the past twelve months) and food staples (e.g., the price of food, which increased 23% just during the month of February). Chinese consumers have benefitted from the state control of energy prices, which has also resulted in the loss of over 50% of the value of Sinopec shares within the last six months as the government continues it attempt to control fuel costs for consumers. Such trends are unsustainable for a country with a population in excess of 1.3 billion and which imports approximately 78% of its petroleum. Data published by the U.S. Energy Information Administration indicates that China’s increase in oil demand represents a majority of the total global increase in demand. With increasing demand and relatively flat domestic production since 1986, China’s reliance on petroleum imports is expected to continue, subjecting the government to additional economic stress.

    In its semi-annual Economic Outlook published this month, the Paris-based Organisation for Economic Co-operation and Development [OECD] expressed concern regarding the threat posed by persistent inflationary pressures manifest in China’s domestic market. China’s consumer price index was officially reported at 7.7% in May and 8.5% during April, and remains above its January level of 7.1%. Taking into account China’s industrial consumption of commodities and that China produces very few commodities domestically and is therefore reliant on global sourcing at prevailing prices to procure raw materials for its manufacturing industry, the OECD expects wage and price inflation to erode China's export competitiveness.

    The OECD report states:

    Coupled with ongoing weakness in external demand, exports and the pace of market share gains are projected to slow markedly.
    Such an outcome raises the risk of political instability resulting from increases in urban unemployment and other factors as discussed in this assessment.

    ACTION

    The following trends and events are identified as material to an assessment of China’s near- and mid-term economic outlook:

    The extent of dependency of the Chinese government on hard currency earnings derived from manufactured exports supported largely by U.S. consumer spending.
    The depth of the retreat in U.S. consumer spending and the high probability of a prolonged contraction of the U.S. economy.
    The fundamental dynamics responsible for China’s domestic wage and price inflation and the increased risk of political instability attributable to the rising cost of imported consumer and industrial commodities, reduced demand for export products, and a significant increase in urban unemployment.
    The rate of increase of China’s petroleum consumption and the dependency of China’s export manufacturing sector on petroleum imports.
    China’s ability to maintain the global competitiveness of Chinese manufactured goods in the face of rapidly increasing transportation costs.
    Government debt statistics evidencing an unsustainable overreliance on debt financing, particularly short-term debt, to sustain economic growth.
    Repudiation by the Government of China of $260 billion of its sovereign debt and the pending reclassification of the Chinese government’s sovereign credit rating into ‘Selective Default’.
    Upon an evaluation of the foregoing, Sovereign Advisers issues a Negative Outlook for the domestic economic prospects of the People’s Republic of China and a Negative Outlook for the safety and performance of government bonds issued by the People’s Republic of China.
    Aug 13 17:30 pm |Rating: 0 0 |Link to Comment |View article
  • The Case for Buying China Now
    China can't make it selling to itself, even with it's huge population.

    The global economy is on the verge of recession and some countryies will face depression before the tide turns, 4 to 10 years from now.

    Get real and keep your powder dry. There will be a time to buy FXI, but certainly not now IMO. When that time comes, I will be a buyer of FXI.

    FXP is a better bet. I look for FXI to go to 60 and FXP to go to 200 by November, 2008.
    Jul 22 10:07 am |Rating: 0 0 |Link to Comment |View article
  • China's Impending Financial Crisis
    Makes you wonder why anyone would invest in China before the Olympics if they could reasonably conclude that the market will be down substantially in the months following the Recession? Correction: following the Olympics?
    Jul 13 13:55 pm |Rating: 0 0 |Link to Comment |View article
  • China's Impending Financial Crisis
    It may be that the crisis will come this fall in China after the Olympics. The folks will look around and wonder.. all this sacrifice for what? The market (^ssec) is down 70% by the fall and Germany, England, Japan and US are in recession ... exports are falling dramatically ... so what did we gain by the Olympics, they ask the government?

    The American investors who have been talked into investing in FXI, (China 25 stock index) will then find their holding severely eroded, following the ^ssec and ^hsi indexes down. Poor things, they just don't have a good place to store their money in a bear market and the talking heads keep giving the wrong advise! A sad situation. Makes you wonder why anyone would invest in China before the Olympics if they could reasonably conclude that the market will be down substantially in the months following the Recession?
    Jul 13 13:53 pm |Rating: 0 0 |Link to Comment |View article
  • Where Are the Chinese Stock-Market Riots?
    Did you hear that China Oil which had an initial public offering last November and instantly became the largest capitalized company in the world has now lost 70% of it's value?

    They are going to sell $8.7 Billion in bonds to increase working capital! They are required to sell gas and oil below cost by the government. This will probably be passed on to consumers, then you might see riots like we are beginning to see here and in England. Truckers in England pay $9/gal for fuel.

    The problem is OPEC,

    VERY PLAIN, VERY SIMPLE.

    THOSE THAT CONTOL THE OIL CONTROLS THE WORLDS ECONOMIC FUTURE,

    AND THEY ARE NOW TRYING TO BANKRUPT THE WORLDS LARGE BANKS SO THAT THEY CAN GAIN POLITICAL POWER AND POWER FOR I-SLUM.

    EVEN SUPER POWERS LIKE CHINA, INDIA AND BRAZIL CAN BE HURT IN THE COMING "GREATER" DEPRESSION.
    Jun 12 08:48 am |Rating: 0 0 |Link to Comment |View article

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