CHINA THE WORLDS WILD CARD !!!
What could go wrong?
Well let me tell you what has already gone wrong.
China is a commuist economy. That means transparency as known in western market space does not exist- at all. Is Chinese currency worthless. That is the ultimate end game question.
Today we have a ten year recovery from the worst melt down and recession since 1929. The recovery is FRAGILE and not strong yet.
China had to devaluate its currency to stay Ihe game at all.
To sustain order and growth the two communist respected agenda’s they infused untold money following the crash into infrastructure. The problem is the Chinese system is opaque and outside customs of tradition and regulations.
So the loans developed from thousands of banks and tens of thousands of shadow bank lenders. Today 500,00 billion is known to be bad loans not repaying their principle and interest. This number however is a tip of an ice berg in China financial sectors.
The 20 TRILLION DOLLAR shadow banking industry is murky to say the least. In recent years the banks have packaged their crap loans and sold those as good performing real assets to shadow bank syndicates and banks around the world own those note packages today.
The problem – which I keep writing about related to the DEBT BOMB is liquidity. If the musical chairs of passion these bad loan packages around comes home to roast – meaning economics always rebalances from system abuse – banks will have to write off the bad loans.
Which many experts believe is untold TRILLIONS of Dollars. This sum is not manageable by communist central bank planners educated at Cambridge and Harvard. It has gotten away from the central planners.
Today the growth in CHINA is 300% borrowing over what they ear in GNP output. A year for ten years piling up.
The bad loans to build out infrastructure are not being repaid. The IMF has warned about all this 15 times in 24 months – which we report right here on this blog.
The musical chair game has stalled any rebalancing. The tipping point economically is a whisper away now.
A TRADE WAR is the tipping point and AI software knows that. IT is that smart – say – smarter than I am with more data than I have.
You GOT TO KNOW WHEN TO HOLD THEM is a blog I wrote on this topic – did you scroll and read it.
So here is Trump at the poker table. He sells 130 billion to China each year.
China and XI at the poker table sell to the USA over 500 billion each year. That is 20% of the entire Chinese economic system by itself. Just that. And we influence another 30% among our allies.
Trump has a full house at the poker table – five to one we buy from China more than they buy from us.
Who negotiates from strength of the DEAL? Really ?
Five to one.
XI gets this.
The USA in a real trade war sinks China. China goes bankrupt in.a cascade of debt defaulting and a market roar out of CHINA with trillions in capital leaving CHINA. A trillion has already left folks. The RUN on China is part of today’s market space.
Liquidity in China is drying up even before the USA pushes its chips onto the table ( all of them if needed ) and says WE CALL.
You got to know when to FOLD THEM.
FULL HOUSE ( 5 to 1 ) over say XI and communist holding two two’s. Trade WAR?
China can’t pay its garbage removal – water clean up – or basic services. The military crashes into the dust in China Trade Wars.
No one wants this for the Chinese People. Or the World overall.
No one. Especially Trump who understands all this and respects XI trying to lead his nation out of the mind field of debt and the 10,000’s of institutions that drive debt to support the economy over all.
All that is required is FAIR TRADE. A reciprocity trade where trarriff’s are opened versus closed to each side. China will prosper in FREE OPEN TRADE not decline. America trade accounts will balance and re-balance slowly over time and the markets will go WILD. Which is what we expect.
But in POKER folks your tells give you away.
The facts and who holds what are known.
USA Full house.
China two two’s.
Trump and XI have audiences all around the table to please. Politics versus economics while the tipping point is a whisper into the future. Any mis fire and the tipping point is RIGHT NOW.
Trump has to bet.
XI has to match.
Trump has to keep those chips moving to the center of the table.
Xi has to match.
Trump has to be careful when to CALL.
When he calls ( trade war ) China falls. The Tipping point.
If XI can fold into long term free trade and fair trade the outcome is mutual prosperity for a new cooperation between all players.
XI has powerful forces that want to “go against AMERICA” now feeling ( falsely ) they have capacity economically they in fact lack.
The USA has powerful forces on TRUMP suggesting the time to PUNISH CHINA is now – which is actually a huge recession and market risk for the USA as we lack capacity to do that step without consequences that are horrific for the world buying all those bad debts – wipe out could span the globe as the IMF warns. The entire system is at risk here – says the IMF in 2018. The entire system.
On miscalculation at that poker table.
Not in the press is all the moves each sides is telegraphing in private to the other to moderate through the POWERFUL FORCES who lack all the information. Powerful on both sides non the less.
The IMF warned this week the critical card in the game is TRUST. If TRUST which XI and TRUMP have together as leaders – can be built upon to slowly impact the POWERFUL FORCES influencing the game daily – outcomes could be MAGIC.
If not – the tipping point is a whisper away. In all outcomes the USA wins but not well and not as if we have magic and a miracle from the poker game.
5 to 1.
We hold ALL the CARDS.
That is a fact.
Now the issues is – can China save herself?
New policies are required.
As there are no alternative options we have to wait.
Imbalanced trading – 5 to 1 – is not sustainable economics for the USA. WE are at the end of economic subsidy to China. We have to now have economic parity to continue. SO rich and positive for China moving forward.
In politics one must draw on the 11th commandment ….
…never assume leaders will do what is their own best interest – say see Hitler or Stalin or others history has marked for GPS today…..
IT all boils down to Kenny Rogers in America folks – regardless of your position over money today….
….you got to know when to hold them and you’ve got to KNOW when to fold them…….
Timing is everything in the art of the DEAL’s today.
Iran is getting a boast and Saudi is getting a kick in the knee’s today. Another set of cards here.
Folks – we have time. But time and the tipping point are coming to a point in tomorrow no one would wish for. We are that close.
Berny Dohrmann – THAT IS WHAT IS GOING ON OUT “THERE”
THIS WEEK THE SUN SETS ON CHINA:
The markets dove as the world moves into trade war for real. China the debtor nation is caught between a rock and a revolution. if China employment drops off a cliff into recession or worse due to trade wars, America will come out just fine and on top. However the shift back to America will not be a recovery event for China.
This Debtor nation borrows 300% more than it earns for so many years the IMF has warned and re-warned and warned again in 2018 that China is a systemic risk to the entire world interdependent system as it creates phony economics driven by debt under communism. Communism is always a failed economic model.
The sea anchor of debt President XI warns must decline “slowly” over time. But China lacks time due to trade war. The survival of Chia free of a revolution when 87% of all citizens are not members of the communist party – the problem is aging demographics and young global free thinkers and debt. The world needs to learn about China and quick.
China has too options:
- Free Trade really and rule of law
- Business as usual – theft and digital war with the west
The West has HAD IT with digital theft and phony economics within a one way money bridge that has fully imbalanced economic accounts as set forth by the UN – World Bank – IMF – US Treasury – EU and frankly this blog.
China is opting for trade war.
The problem with that escalation is the mind set – always undervalued – of AMERICANS. American’s could stop buying made in China everything – on a dime. We are discussing so many trillions drying up in say – 90 days – that China crashes into an economic sunset like the world has ever seen before. Digital darkness. Economic night.
The ramifications to China stability are beyond measure in today’s terms. Given China’s long history of social disorder the current economic mess from failed communist economics is a phony mirror. The victims – the WEST are not only totally DONE with economic abuse theft and lack of rule of law – but done with words versus action.
The risk is fantastic to the entire world and the risk is now – and taking place.
Trillions of wealth have been wiped out since the start of this – say is weeks ago. That right – trillions upon trillions in six short weeks. Wait for it – as the real other shoe has not fallen.
HAVE YOU READ DONALD TRUMPS ART OF THE DEAL?
President XI the King for Life in China – has but he may have not understood the words.
The USA token tariff’s the biggest dumping of below cost trade goods on earth – China Steel and Aluminum in such surplus they can’t sell the piles they have of both outside dumping costing. Economically unsustainable. Brought about by debt to secure jobs to assure stability in the population in China while polluting their own people to levels humans have never experienced before – in fact most humans on the planet.
Bad business communism.
So – China responds over ten days with 128 tariff’s to two.
Now one may think Trumps team about to release 60 billion of tariff’s to China – to bring their leadership to the real table of FAIR TRADE versus DARE TRADE – and rule of law to stop STEALING INVENTIONS BY HACKING = the core of the China Communism miracle – stealing replaces dealing.
Enough is enough says Congress and Trump.
Now does Trump MEAN BUSINESS?
What do you think?
The giant sucking sound Ross Perot refined for all of us with NAFTA took place exactly as the billionaire warned us it would.
Exactly. Now they are trying to repair that mess – that one way sucking sound out of America into other once poor nations.
China is worse. The Chinese have hacked every agency of the nation and every corporation data base for invention trolling. When do you stop the stealing and reset the world onto a level keel?
We can keep doing business as usual – MAKE CHINA GREAT AGAIN but it is tragic economics for our own unborn.
- China has trade taxes that make American goods too costly in China.
- China culture steals American anything from Burgers to phones and Chinese buy CHINESE not American.
- China laws make impossible barriers to free trade – you have to associate with china partners and allow your secrets and inventions to be immediately ripped off to do any business in China.
- Google is blocked – Face book is blocked – so many others and Apple had to put its keys to all of our data on Chinese servers to keep getting parts made over there – why not English speaking INDIA with RULE OF LAW protection?
- Economics in China is partnership means 11 to 1 to China which has built the largest imbalance of currency reserves on earth in ten years. Not sustainable as IMF warns and warns.
Nixon Opened China for business.
Trump may well close China for business.
As China can not survive such a trade war and remain as it is today, the choice is revolution or wars. War is most likely.
Asia at war – consider that for a moment.
China has – ruled criminal by the world courts – redrawn maps to suggest all of Asia is now inside the Chinese exclusive influence zone -of oceans lands and seas. The opposing power is the USA and JAPAN today – and despite what you may believe CHINA is not enabled to propel their illegal will on those nations – and Russia is in the end not going to side with China – they are going to side with World War II partners who helped them win.
China is misplaying its cards.
A China summit is the answer were communist leadership reforms to global rule of law and prospers.
Any other course ends in communist bankruptcy economically and ultimately a revolution in CHINA which no one wishes.
What leaders fail to see are at the end – the core economics.
So today we have our manufacturing down.
We have consumer confidence down at end of March first time this year.
We have a market crash again today. Again. Today.
We have trade war heating up just like the IMF feared an warned us all about.
The recovery globally is fragile.
The time to rebalance economics is right now however not later in time.
China is most vulnerable to the sun setting economically right now in her pile of communist debt – the upside down bankrupt nation in fact.
Cascading defaults will effect the entire world from CHINA from a trade war she can not survive let alone win.
So what comes now? What comes next?
The Trump Team is reviewing the second wave of trade punishment for China theft lies and cheats to America over time. Pure theft at a state sponsored level.
Big Brains have got this and the BIG BRAINS have called sunset on economics in China or reform trade law practices really.
Door number one is prosperity.
Door number two is ruin and war.
Trump’s team is fighting digital world war III economically first.
All wars begin economically.
America has been frankly loosing since the digital attacks from Russia and China in 2008 – they made fortunes and almost wiped us out. Then they stole digitally everything we had period – everything.
Today we are ready and we are pissed off.
The digital wars are about to shift and China has like so many before created a fatal reality – China has VASTLY UNDERESTIMATED THE United States OF AMERICA.
Her wonderful people have no clue in the few against the many.
Why not trade fair – why not stop stealing?
You = all of my readers well know the answer to this.
Now the trade wars get serious – China made a miscalculation.
Wrong President wrong time – wrong moment in history folks.
The line in China’s sunset has been drawn.
There will be zero backing up.
The Economics will not be kind to China as the sun also sets.
Berny Dohrmann – ONE WHAT JUST WENT ON TODAY OUT THERE
7 TRILLION DOLLAR CHINESE BOND MARKETS OPENS
Timed for the Hong Kong anniversary – the Chinese bond market with 7 trillion of assets mostly debt for the government and national company – SRO’s or State Run Organizations and the debt of their private sector debt notes – are not going on Sale for the FIRST TIME to global markets.
The world is asked to BET on Chinese currency which is ultimately in that closed communist controlled central market – the underwriting of bond value or world pass off of Chinese debt notes. So the CHINESE BOND market does not have the regulatory frame work or reporting debt with oversight other Western Markets in rule of law maturity do have. So it is not bond to bond or quality to quality. You play in uncharted new waters in a new model the world has never experienced before one of many taking place today.
The 7 trillion dollar Chinese bond market – facing panic in not being able to support its growing debt markets – they spend 300% more than they earn – now pass what may be utter crap – onto the rest of the world. The way to keep capital circulating is to offload these debts and they now are doing just that. Capital outside China will now own Chinese debt by a spiral of % that will soar next.
Will this contaminate the global bond market? Is that China’s ultimate plan ? Using their cash reclaimed to profit from the pieces in the after math? Not a bad plan folks.
This bond market is certain to foster hybrid structured assets.
New Western Pools of bonds – then super bond pools – then super duper pools of those pools of Chinese debt. This money consolidation will make it impossible as you end up with scrambled egg asset classes – just as the smarty pants created the same pooling in mortgage back debt securities – so no credit agency or nation could regulate or tell accurately any longer – what was CRAP and what was NOT. When the short seller SUPER MONEY POOLS defined the pools when the crap they shorted the market to the point global regulators had to ban legally all world SHORT SELLING for a time to get the markets back into any type of control and supervision…could it happen here and fast? At first it will be sold as riskless risk just like AAA RATED SUB PRIME Crap was sold to sovereign wealth funds and retirement plans for Iceland and Norway to name a few
We expect the CHINESE Bond Market to begin with relish as the world has a new money pipe to invest within and make profits over. The 440 trillion of SUPER MONEY LEVERAGE POOLS will begin NEW leverage into Chinese debt purchases we suspect at a pace and structure the world has never yet known. This will kick the Chinese debt problem down the road….for the communist. The outcome they as a new world power – seek in this new model. They lack capital to support the SEVEN TRILLION DOLLAR DEBT MODELING they created a SUPER BUBBLE FOR so now they make the SUPER DEBT BUBBLE worst by passing it off to the world market space – where the brokers at the top of super money pools make untold profits as this all opens in August. Get the picture?
But how long really. Years or months? Kicked down the road HOW LONG. That is the question economically. Nothing is fixed by kicking the can down the road ( the crises ) because it makes it ultimately WORSE and som any more people ( not Chinese though ) loose and with leverage can lose with margin calls without liquidity later – you can lose MORE THAN EVERYTHING.
Digital markets tend to sort things out faster and faster. In less and less time Super Bubbles crash like they did in 2008 as Super Money works against Super Money for profit taking.
While early profit making in this new pipe will be enormous for the SUPER MONEY we predict the regular investors who invest in these consolidations – Private Equity Hedge Funds and the like – all ETF and no longer PEOPLE managed by human intelligence – rather managed by software – a new UNCONTROLLED experiment is taking place and no one can predict the outcome of these global interactions where risk is shared globally. Bad risk as well as good.
We anticipate China will eventually have wild inflation – then a SUPER CRASH driven by debt defaults made far worse and now fully off loaded globally reducing impact to CHINA Communist planning as a central state controlled model – but passing the buck so to speak to the world. The Chinese real estate market is inside the world’s largest super bubble in history. The policies to slow down the SUPER BUBBLE has all FAILED to date. The growth of the out of control real estate bubble – super inflating driven by unimaginable debt – is creating a spiral inside the super bubble that is racing upward till the bubble crashes. Now much of this debt will be offloaded to the world. Is this a good thing in the market place? Oil Opec nations in the red at todays oil prices are doing the same – offloading debt assets and core equity assets to world market capital. How will this off loading play out?
So to say we are not amused by this hand off of risk we are monitoring the markets which will change once again and we do not believe for the better.
Milton Freidman the economist Nobel winner advocates from his grave that economies have latent core intelligence and self correct if left alone to do so.
Kenyan the economist we believe in as theory and love suggest the economies are herd driven by greed and require greed regulatory frame works to moderate unwanted market speculation abuse and leverage. We h0pe this theory wins out IT is sane. Freidman theory has proven a failure in 2008 and before in 2000 and before in 1987 . IT is just insane.
These two economic theories are in conflict. In modern times as the markets Friedman wrote about where paper clearing – and in ten years after he died – the markets moved into new digital configurations the world has never seen before with leverage and borrowing the world has never known before – pure insanity rules. The market of real economic investing has been surpassed by 2.9 trillion to 440 trillion in pure digital speculations greed and price manipulation.
In our age CASINO CAPITALISM is now THE MARKET and the entire market is controlled by elite super money pools with software. The winners are those who advance ever more well constructed AI super software to control money trading. Prices are manipulated by software for profit making.
The majority of the market of SUPER MONEY pools is on summer vacation until this fall starting in September as we wrote you. We told you trading volume would be lower and volatility would go up and go down in controlled ranges with lower volatility – the lowest volatility since 1999. Software moderated. Until the SUPER MONEY comes back when the year and evolved and improved softwares being built now in AI come on line this fall. They in all nations are testing now. We feel all hell may break lose in this fall with special attention to October when we host a CEO SPACE Acceleration conference following our Big one August 1st I teach at personally. I’d Love to meet you in both.
Rogue nations use SOFTWARE OF MASS ECONOMIC destruction to influence markets and to influence all asset class pricing today and make huge profits by massive short selling in target nations and industries. That new economic warfare has no counter measure from regulators as the laws are all local to nations and the actual trades are all digital and in the cloud. Without a G 100 new economic treaty regulations do not exist for the modern software cloud trading today.
So rogue nations are developing very advance AI trading to take sovereign wealth SUPER MONEY POOLS leverage these pools by up to 50 to 1 per dollar – and then invest to profit from destroying markets they short sell making billions in these wild speculations using ever intelligent software. This is all a new experiment and regulators have fallen behind and MUST CATCH up or the entire system is in our opinion at HUGE RISK and you know why are our regulator readers because you have data the world largely lacks. The population is largely economically illiterate and does not know how to read the financial alphabet . You are readers are developing your financial literacy which helps you to plan business growth and to keep more o your hard earned and precious nest eggs. Which we hope we help you all upon.
Friday the Chase WHITE WHALE where Jamie Diamond was responsible for system oversight – lost some 9 billion dollars when all is said of Chase depositor money from core bank deposits being wildly leveraged without any one’s knowledge or permission – such that each deposit is FDIC protected in a single Chase Bank trade that took seconds with software to utterly lose 9 billion dollars cash bam a new event in financial markets – where Friday the Departure of Justice closed their criminal case against the two LONDON traders that caused those loses lacking witness and hard evidence to convict. This level of software trading Mal practice in the new digital world of CASINO CAPITALISM has no consequence for legal theft. The crooks got away with financial murder.
Without the latest NEW REGULATORY re-think we are stuck between Friedman theory ( favored by law and policy markets world wide as a failed model for 20 years reducing regulatory oversight ) and no regulation exists today in global digital super money shadow banking trading – and Kensyan and moderating regulation and oversight of global financial market space which a minority of law makers and nations are favoring thank God for THEM each and every one. They are leading the save for the entire system one nation at a time – we consult to as many as will have us.
We feel the growing use of AI from the SUPER MONEY POOL planners always seeking to maximize market prices and influence outcomes for profit ( the GREED MACHINE ) operates in an entirely new experiment ( new software the world has no experience with every super changing by the quarter as real AI advances ) so that – the planners truly believe they are forging market RISKLESS RISK there no real risk long term. Which is frankly insane.
Economically there IS NO RISKLESS..RISK. All investing has risk all of it. No exceptions. You the buyer must assess the risk. The tools for doing so are opaque due to out dated market regulatory frame work and the transparency and integrity we all wish for is simply a pipe dream until a global REGULATORY G 100 RETHINK of world Wide regulatory frame work to include digital speculation moderation is CREATED.
The market went digital and the regulations and agencies are antique and must be modernized and expanded to keep pace.
We believe these mind sets while truly well intending to result are naive and misguided just as they were in SUB PRIME. The reasons include at least our investment banker economists cautions include to those planners at the top: This input to consider just consider:
- Software modeling that is super changing is not tested and proven in interactions to real economic conditions.
- Debt and leverage are adding to the risk at a fantastic spiral that causes great concern.
- If interest rates rise too rapidly the debt load in short term debt 100’s of trillions of world wide dollars – must refinance at every higher interest rates. Following ten years of AI and software rising up in zero interest rates – we feel the same problem with Sub Prime has returned but is so much worse due to leverage and Dept super spirals into a new global the SUPER BUBBLE which has become the SUPER DEBT and leverage in the core system. This new SUPER DEBT BUBBLE is fully global now and at a level world markets have never ever known historically. Increasingly beyond care and risk monitoring due to AI and software drivers. The new digital markets have created a world CASINO CAPITALISM all new economics that our paced regulatory frame work to moderate the GREED MACHINE which fails to see or mange the spiral of RISK that is inside the DEBT SUPER BUBBLE driving all other bubbles when you review it. As this SUPER BUBBLE is keeping nations like China and the Gulf from crashing and bankruptcy of nations – also unwanted – a FIX is required. A new creation to fix it once calm economists come together on the real core problem to the entire global system.
- The ETF growth now provides SUPER POOLS that when a Super Crash occurs ( and it always does ) due to debt defaulting somewhere – the contagion of software moving out becomes a ripple CASCADE the humans in the market have for the first time in economic history lost controls over. No one knows the outcome of the future crashes in digital controlled markets.
- The liquidity effect is what we report is our concern where liquidity dries up when there are too many sellers over time and to few buyers and markets seize up close down and become in crises dysfunction. This took months in paper world. In digital world this takes hours. World shock absorbers lost the control in liquidity ( public bail outs ) because there is now not enough cash to fix it anywhere on earth. That becomes the new risk – Sub Prime planners had no models – none at all for what took place if REAL ESTATE went down for years of time. As interest rates rose in Variable Rate mortgages record debt defaults took place and the market seized up and ceased to function. The SUPER CRASH of 2008. Liquidity lessons where not learned and no real regulatory frame work was put in place to address the frame work must now be GLOBAL as the trading has moved to digital and the regulatory Frame work no longer functions in digital casino capitalism.
So the issues simplified here are enormously complex when it comes to PUBLIC POLICY and protecting the entire economic system – which requires CHINA the USA RUSSIA and all the parties to resolve together or it can not be fixed this side of a SUPER CRASH. Which is what we are spiraling into.
We continue to spit in the wind in our lobby work with nations but in the end the CEO SPACE voice for small business, is one voice of many and the FINANCIAL LOBBY has become the larger voice in most nations and returning sanity to my tribe before it is too late is another work we under take. We’ll see if we can use time to our mutual advantage. Time is running out however as you can all see.
Increasingly we are asked to consult on teams for sovereign nations in fact I’m doing one tomorrow morning – and from Super Money pools we consult to. To drive a tribe to take this all on requires a larger community of thinkers at the top and is there enough time remaining to build it. We are trying for you all to the best of our ability given our global footprint in 140 nations.
Meanwhile it all does not effect us. Not today. Not next month. Right now were in debt driven boom times so EITHER USE IT FOR ALL YOUR WORTH or LOSE IT – nations to individuals. August 1st CEO SPACE host the BIGGEST CEO SPACE ( out of five ) in any year at DISNEY WORLD. WE invite all business owners and CEO’s from solo to Billionaires to attend as they are next week. just show up and register at the door. You can click http://www.ceospace.net to explore just explore your own acceleration. To accelerate your business and to build SAFE HARBOR from developing financial storm clouds. the four days in Orlando make a lot of sense to forward planning Invest in acceleration while these good times and AS these are good times and opportunity is today seriously rolling.
Paulson the hedge Fund Managers said Friday it will be YEARS in his opinion till we have another recession. I hope he is right.
Bill Goss my hero predictor said – not so much as he worries as I do Fed Policy WILL raise interest rates now and too soon by too much making untold profits for their SUPER MONEY owners – bit will cause zero interest borrowers over a decade to possibly fail and not make it when their cost rise up – like variable rate on housing but now bank variable rate on the cost of everything. The FEDS last game card to defeat DEFLATION SPIRALS and restart INFLATION which for ten years the Fed has with their one failed policy after another – failed to install. Japan has failed for 20 years. We have failed for ten years. Will they fail now and one more final time? Causing the unwanted super crash. Goss thinks yes. I do too.
What goes up Newton made clear – must come back down.
The question is when.
The answer is no one knows and we can only provide information to help you monitor conditions as you obtain other experts and their information.
Long time readers have profited from legendary accuracy in predictions on this blog site on the WHY THE WHAT AND THE WHEN. We are a bible for press in tracking trends and for money managers and business owners world wide.
We thank you all for staying up on what is REALLY going on OUT THERE.
Berny Dohrmann – Keeping the truth on for you on whats real
THE 8 BILLION DOLLAR ONE MONTH GUT PUNCH TO CHINA:
Since Trump took office in January, the trade with China has fallen by 26% or 8 Billion dollars in one month. That drop was a GUT PUNCH to China trade the world should well take note of. No coal from Australia cut off from the CYCLONE has China scambling or coal – where – from the USA – smart choice. Expect massive rebalancing from the new COAL TRADE market share Australia is loosing today and the USA is gaining today. Stay tuned. The world is shifting on weather. Exports from the US rose. Imports largely from China fell. The RUN on China you have heard me report upon for two years is quite dramatic. I’ve said investors long in China are going to experience some pain I should suspect.
Why? Well, China policy is slow deliberate and incremental.
US Abuse in IP theft, manufacturing theft through unfair government price supports, and trade balance abuse has gone on too long. The 8 Billion Dollar one month decline in imports from the USA a 26% one month drop in trade with China by the USA marks the TRUMP POLICY at work. Rebalancing the trade deficit where the USA sells as much in China as we buy is a model of economic policy that must be addressed as the present model may not continue for the USA as a matter of economic 101. Investors in China like the old saying – pink sky at morn sailors take warn – INVESTORS TAKE WARN.
Trump seeks MASSIVE CHANGE to the balance of USA accounts, or a trade war with China will begin and that rebalancing will take place. The golden rise of China has come to a dawn. If China cooperates the world wins. If China competes ( which is the Chinese way ) the world loses and the USA WINS and the dollar wins and China will experience a SUPER CRASH.
Will war break out? If it does China will experience a massive destruction of accounts and futures and the USA will profit from the war regardless of the outcome.
I was participating in the leadership of the EU’s most amazing THINK TANK on cooperative economics this last weekend. One comment was thought to provoke. Mr. Dohrmann, I was asked – why has America not truly won a decisive war in recent memory since Vietnam? The answer – strategically at the outset they were not planning to win – it was all strategic – they were not supposed to win. They were speaking about economics, not politics and the notions with their support made a lot of sense.
The wars today are about rebalancing economic trade issues.
The two nations are seeking a forward outcome. They both have preparation. The competition is:
If you do this you pay with that.
The cooperation outcome is:
If you reward us with this we reward you with that.
In the end, POLICY is about Competition the old economics – the failed economics – or COOPERATION the more effective economics.
Cooperation vs. competition.
Good versus evil really.
That is the game this week – in the mind – and in the outcome of world leadership upon which we all are watching as witnesses. The reports of detail mean nothing. The reports of cooperation versus competition that are deal bound and agreement achievements are the capital of the world’s future – China’s and the USA.
In the end, the USA is seeking a fresh start as the economic abuse is now coming to a close. The USA must sell as much as we buy from China or the trade can not continue as we have known it.
Nothing personal it is just economics. China’s threats on selling our debt and dollars create a yawn. The weapons China possesses in economics are popguns against hydrogen bombs economically the USA possesses.
The unique personality of Donald Trump is nothing like China has known in the past.
One thing you can count upon. This meeting is NOT business as usual.
Berny Dohrmann – LIGHTHOUSE ON CHINA THIS WEEK IN FLORIDA WHERE I AM NOW
FIRST QUARTER CHINA:
China ended its annual political convention with a PRIORITY for control of financial system core risk. This itself defines how BAD the risk IS.
The first volley is to punish banks for dealing in shadow banking. To keep up the loan and profit velocity, China financial institutions are using assets the central banks increasingly is disallowing. The unintended CONSEQUENCE is that banks sell off assets. Some lenders went into default positions ( as the assets they used as core resource were disqualified ) and the central bank was FORCED to inject liquidity into those systems. Interactive bank lending and bond price sets are soaring.
My prior Blog reporeted on Shadow banking and its effects due to digital circumvention of fiscal regulations.
One target was and has been over two years cooling the SUPER BUBBLE of the China housing market – skyrocketing within unsustainable valuation’s much like the rest of the world experienced earlier in this decade. Planners fear SUPER CRASH in the system.
Debt is the issue. Downpayments on second and third home loans have now been substantially increased. Lenders are engaging SHADOW BANKING to resolve the issue in virtual and digital joint ventures that defy regulators on the conventional books. The Chinese central bank is engaging old tools and old tactics to ratchet down the property SUPER BUBBLE and the CREDIT SUPER BUBBLE.
However these policies – to date – have failed. The real estate market is soaring and the bubble is in a spiral that has no end in sight in 2017. The CONTROL OF RISK is including new punishing tools to banks who fail to follow central planner directions. The unintended consequence here, is that banks dump bonds and core assets to secure liquidity against credit controls, and STOP MAKING LOANS. The economic break is also unwanted.
The unfolding CHINESE experiment is new financial history. No nation has engaged this level of debt to income ratio, nor had the majority of its capital circulation occur in digital space, outside regulatory ease of conventional review assessment and control. Lacking real time digital assessment tools – nations including China – are behind real time events and when they review the issues the CRISES has already occurred. Will the Central Banks in China continue to furnish unlimited liquidity to assure the system does not lock up? Can the upside down pyramid of bad loans shown as good and current assets, against real assets liquidity and income continue to wobble and remain in place?
Will a SUPER CRASH occur via contagion and panic in China?
That remains the 2017 and 2018 risk related to China economics.
We have long warned that China economics are not sustainable at 300% debt to GNP to drive economics. We also have reported that there are serious asset class SUPER BUBBLES in China economics. Finally. we have warned the trillions in non performing loan bad debt must work out of the system which will create a rebalancing of accounts.
Kicking the ball down the street as leadership does year to year makes it all worse when the SUPER CRASH hits.
Historically such economies always result in a SUPER CRASH.
We continue to hope for the best as we are concerned for the worst.
Berny Dohrmann – China First Quarter Review – Just IN March 2017
PS: Off to the EU tomorrow to work with heads of state.