Bits Bucket for August 12, 2015
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Was yesterday’s devaluation move by China enough to shore up their stock market?
China lets yuan fall further, fuels fears of currency war
By Pete Sweeney and Lu Jianxin
SHANGHAI | Wed Aug 12, 2015 3:37am EDT
By Pete Sweeney and Lu Jianxin
SHANGHAI (Reuters) - China’s yuan hit a four-year low on Wednesday, falling for a second day after authorities devalued it in a move that sparked fears of a global currency war and accusations that Beijing was unfairly supporting its struggling exporters.
Spot yuan in China fell to 6.45 per dollar, its weakest since August 2011, after the central bank set its daily midpoint reference at 6.3306, even weaker than Tuesday’s devaluation.
The currency fared worse in international trade, touching 6.59.
The central bank, which had described the devaluation as a one-off step to make the yuan more responsive to market forces, sought to reassure financial markets on Wednesday that it was not embarking on a steady depreciation.
“Looking at the international and domestic economic situation, currently there is no basis for a sustained depreciation trend for the yuan,” the People’s Bank of China (PBOC) said.
…
YANG
What kind of war do we want? We can have a currency war, a trade war, or a violent war. Which of the three might the US actually win?
We can have a currency war, WIN
a trade war, WIN
or a violent war. LOSE
Marketwatch dot com
Asia Markets
Asia stock slump deepens after China devaluation move
By Chao Deng
Published: Aug 12, 2015 1:50 a.m. ET
Shanghai Composite slips, Nikkei pounded
China’s yuan devaulation continues to rattle markets.
China’s devaluation of the yuan hit markets across Asia for the second straight day, with currencies like the Malaysian ringgit and Philippine peso hitting fresh multiyear lows and stocks in Japan and Hong Kong falling nearly 1%.
The Chinese yuan (USDCNY, +0.9738%) fell 1.6% against the U.S. dollar after the country’s central bank set its daily reference rate to the U.S. dollar down 1.6% on Wednesday from Tuesday’s rate. The move came after China surprised international markets yesterday by setting the rate 1.9% lower from the previous day’s, saying it would take into account the closing market level when guiding its currency. The onshore yuan is allowed to trade in a 2% band around the bank’s fixing.
By late morning Wednesday, the Indonesian rupiah and Malaysian ringgit had fallen 1.4% and 0.8% respectively against the U.S. dollar, to fresh lows not seen since the Asian financial crisis in the late 1990s. The Philippine peso fell 0.3% to trade at 46.180 against the U.S. dollar, its lowest level in five years.
The losses across Asia come after the yuan’s fall rattled global markets overnight. Investors worry that the yuan devaluation shows that China’s economic slowdown may be more severe than the government has been willing to admit through data, and that demand for dollar-denominated commodities will fall in a country that is the top consumer of many raw materials.
…
“The magnitude of the yuan drop yesterday and today are huge for China and significant” in the context of Asian forex market history, said Jason Leinwand, New York based managing director at Riverside Risk Advisors. “The currency devaluation is really driven by the [central bank’s] fear that growth is too weak in China.”
Shares across Asia deepened their slumps, following losses in currency markets. South Korea’s Kospi (SEU, -0.56%) was down 1%, the Nikkei Stock Average (NIK, -1.58%) fell 1.4% and the Hang Seng Index (HSI, -2.38%) was off 2%.
The Shanghai Composite Index (SHCOMP, -1.06%) was trading down 0.2%.
The Chinese government continues to buy domestic stocks to support the market after a massive selloff between mid-June and early July. Investors continue to expect monetary easing measures that could help lift stocks amid a slowing domestic economy.
…
TheGuardian
Chinese economy
China stuns financial markets by devaluing yuan for second day running
Stocks, currencies and commodities fall sharply across region as investors fear a stalling China economy and possible currency war despite Beijing’s assurances
A bank clerk with bundles of 100-yuan Chinese banknotes.
The Chinese currency hit a four-year low on Wednesday.
Photograph: EPA
Martin Farrer and Fergus Ryan in Beijing
Wednesday 12 August 2015 03.40 EDT
Last modified on Wednesday 12 August 2015 05.05 EDT
China stunned the world’s financial markets on Wednesday by devaluing the yuan for the second consecutive day, triggering fears the world’s second largest economy is in worse shape than investors believed.
The move sent fresh shockwaves through global markets, pushing shares sharply lower and sending commodity prices further into reverse as traders feared the move could ignite a currency war that would destabilise the world economy.
There were widespread losses in Asia, and in Europe stock markets suffered falls of about 1%, with the FTSE 100 tumbling almost 2% at one stage.
The Chinese currency hit a four-year low on Wednesday after the People’s Bank of China set the yuan’s daily midpoint even weaker than in Tuesday’s devaluation.
With the bank having said that Tuesday’s move was a “one-off depreciation”, the rapid drop in the value of China’s currency – about 4% in the past two days – dealt a blow to appetite for risky assets, and markets across the region plunged amid concerns that Beijing has embarked on a damaging currency war.
The unexpected yuan devaluation saw Chinese stocks slump in Hong Kong, with the Hang Seng China Enterprises Index sliding 2.6%, extending its loss this quarter to 15%. The Shanghai Composite Index lost 1% to 3,886.32 and the CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 1.2% to 4,016.13 points.
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They just want to stop puking dollars.
Marketwatch dot com
Brett Arends’s ROI
Opinion: Why China may be on the brink of recession
By Brett Arends
Published: Aug 12, 2015 5:01 a.m. ET
Currency move suggests severe growth slowdown
AFP/Getty Images
China’s economic juggernaut has been the force driving the world’s economy forward, from the oil fields of North Dakota to the condo markets of Sydney and Miami.
So Beijing’s surprise move to slash the price of its currency against the U.S. dollar (DXY, -0.61%) has far-reaching implications. And the yuan devaluation means the unthinkable may have happened.
China, which is supposedly growing by 7% a year, may instead be facing recession. Or it may even have already fallen into one.
…
central banks need to administer prices so people feel confident about the recovery.
What recovery?
The Faith Based Recovery.
Don’t you blaspheme.
How is it “unthinkable” that China might have a recession?
Did the yuan devaluation affect commodities prices?
m dot ft dot com
Commodities crumble on China devaluation
Henry Sanderson
Commodities from metals to oil fell on Tuesday after China devalued its currency, renewing concerns about growth in the world’s largest consumer of raw materials.
Copper fell 4 per cent to a six-year low of $5,114 a tonne, after a brief rally last week. Brent crude, the benchmark oil price, fell almost 3 per cent, back below $50 a barrel, after rallying almost 4 per cent in the previous session.
Metals have been hit by weaker demand in China and continued supply from miners, which have benefited from low energy costs and a stronger dollar. Copper prices are down 21 per cent since their peak this year in May.
Traders said that while devaluing China’s currency could boost exports, that effect has been overshadowed by fears the central bank move signals the economy is still struggling.
“We hope this will help generate the stimulus China requires,” analysts at Investec wrote. “But we note that the stronger US dollar is a negative for commodity prices, and the weaker Chinese currency may make buying of commodities less affordable.”
The drop in Chinese equity markets this summer also led to increased selling of commodities by speculative investors.
The move by the People’s Bank of China sent the renminbi down 1.8 per cent, its biggest daily fall on record.
The sharp drop in metals prices also hit shares of global miners. Commodities giant Glencore fell 7 per cent to hit a record low of 189.3p. The company’s shares have fallen 36 per cent this year. Miner Vedanta Resources fell 8 per cent to 450.9p.
“The logic is that the devaluation makes metal more expensive, so China will buy less — but then I don’t know if that makes sense when prices are this low anyway,” David Wilson, an analyst at Citi said.
…
BloombergBusiness
China’s Yuan Devaluation Is Great News for U.S. Dollar
Netty Idayu Ismail
August 10, 2015 — 9:44 PM PDT Updated on August 11, 2015 — 1:53 AM PDT
China’s decision to devalue the yuan is good news for dollar bulls.
China’s central bank cut the yuan’s daily-fixing rate by a record 1.9 percent Tuesday after the International Monetary Fund last week delayed a decision to endorse it as a reserve currency. The move cast doubt on the health of the world’s second-largest economy, weighing on the currencies of its trading partners and competitors. The dollar was already supported by speculation the Federal Reserve will increase interest-rates as early as next month.
“The dollar story continues to look in almost splendid isolation compared to pretty much everywhere else,” said Jeremy Stretch, a foreign-exchange strategist at Canadian Imperial Bank of Commerce in London. “It just adds to the impetus” for a currency that’s rising because “the growth story is allied to the prospect of Fed tightening upcoming.”
The greenback strengthened against most of its 16 major peers. The New Zealand, Australian, Singapore and Taiwanese dollars tumbled at least 0.7 percent, along with South Korea’s won.
While the dollar has rallied versus all of its major peers in the last 12 months, the bullishness had faded. Forecasters ratcheted back expectations for gains in the dollar after a gauge of the currency fell 1.7 percent in three months ended June 30 amid weakness in the U.S. economy that few predicted. The Bloomberg Dollar Spot Index had surged 20 percent in the previous three quarters.
…
Go dollar, go!
BloombergBusiness
Weaker Yuan Wallops Commodities as Importers Face Higher Costs
Sharon Cho
August 10, 2015 — 9:43 PM PDT Updated on August 11, 2015 — 9:03 PM PDT
The devalued yuan is dealing another blow to commodities.
The yuan was set for its biggest two-day drop since 1994 after China’s central bank cut its reference rate for a second time following a record reduction on Tuesday. Oil and industrial metals fell amid speculation the weaker currency will slow demand by raising the cost of dollar-denominated imports. The Bloomberg Commodity Index of 22 raw materials dropped as much as 0.6 percent, declining for a second day.
Investors were already concerned that demand was weakening in China, where the economy is expected to grow this year at the slowest pace since 1990. While the government seeks to bolster the economy by devaluing the yuan, commodities may end up worse off as imports of metals such as copper slow and exports of raw materials such as steel increase into oversupplied markets.
“China is basically responsible for the bulk of incremental demand and in some of the markets you’re already in surplus, it just makes them extremely vulnerable,” said Dominic Schnider, head of commodities and Asia-Pacific foreign exchange at UBS Group AG’s wealth-management unit in Hong Kong. “Growth concerns will continue to weigh on the market.”
…
Marketwatch dot com
Market Extra
China’s yuan devaluation spells trouble for these commodities
By William Watts
Published: Aug 12, 2015 4:39 a.m. ET
What it means for oil, gold, copper
Getty Images
Tough times for copper.
China is the world’s largest consumer of commodities and, when it comes to metals, is the largest producer of many, as well. So the country’s surprise decision to devalue the yuan by around 1.9% versus the dollar sent shock waves through commodity markets Tuesday.
Analysts at Macquarie offered up a concise explanation for what happened:
“Assume that the metal price in U.S. dollars is constant, then a fall in the yuan against the dollar increases the yuan price of that metal. This should encourage Chinese producers to produce more of the metal, and Chinese consumers to consume less of it,” they said, in a note. “This will mean China needs to import less of the metal (or if it is an exporter, it can export more of metal). This should lower the ‘world price’, i.e. the U.S. dollar price.”
For investors pining for a bottom in commodities, China’s decision wasn’t a welcome move. Beyond the currency effects, it also raises worries about the state of China’s economy and the potential for future demand.
…
Wasn’t the Asian market crisis in the late 1990s triggered by a currency devaluation?
That’s affirmative, PB.
“The Asian financial crisis was a period of financial crisis that gripped much of East Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion.
The crisis started in Thailand (well known in Thailand as the Tom Yum Goong crisis; Thai: วิกฤตต้มยำกุ้ง) with the financial collapse of the Thai baht after the Thai government was forced to float the baht due to lack of foreign currency to support its fixed exchange rate, cutting its peg to the U.S. dollar, after exhaustive efforts to support it in the face of a severe financial over-extension that was in part real estate driven. At the time, Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse of its currency. As the crisis spread, most of Southeast Asia and Japan saw slumping currencies, devalued stock markets and other asset prices, and a precipitous rise in private debt.”
Didn’t things start going great guns here in the US in the late 90s, during the time of the first tech miracles? So that last Asian crisis didn’t effect us at all?
It took down this hedge fund and, some would say, nearly brought down the US and European financial systems. From our friends at Wiki:
“Long-Term Capital Management L.P. (LTCM) was a hedge fund management firm based in Greenwich, Connecticut that used absolute-return trading strategies combined with high financial leverage. The firm’s master hedge fund, Long-Term Capital Portfolio L.P., collapsed in the late 1990s, leading to an agreement on September 23, 1998 among 16 financial institutions — which included Bankers Trust, Barclays, Bear Stearns, Chase Manhattan Bank, Credit Agricole, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, JP Morgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, Paribas, Salomon Smith Barney, Societe Generale, and UBS — for a $3.6 billion recapitalization (bailout) under the supervision of the Federal Reserve.
LTCM was founded in 1994 by John W. Meriwether, the former vice-chairman and head of bond trading at Salomon Brothers. Members of LTCM’s board of directors included Myron S. Scholes and Robert C. Merton, who shared the 1997 Nobel Memorial Prize in Economic Sciences for a “new method to determine the value of derivatives”. Initially successful with annualized return of over 21% (after fees) in its first year, 43% in the second year and 41% in the third year, in 1998 it lost $4.6 billion in less than four months following the 1997 Asian financial crisis and 1998 Russian financial crisis requiring financial intervention by the Federal Reserve, with the fund liquidating and dissolving in early 2000″.
Who knows what is coming down the pike towards us from this Asian currency shock….
LTCM was deemed “too big to fail” and hence bailout-worthy.
By the time of the Fall 2008 financial crisis, a lot more imploding financial firms were deemed “too big to fail”, and hence qualified for bailouts!
Briefing Paper No. 52
Too Big to Fail? Long-Term Capital Management and the Federal Reserve
By Kevin Dowd
September 23, 1999
Executive Summary
In September 1998 the Federal Reserve organized a rescue of Long-Term Capital Management, a very large and prominent hedge fund on the brink of failure. The Fed intervened because it was concerned about possible dire consequences for world financial markets if it allowed the hedge fund to fail.
The Fed’s intervention was misguided and unnecessary because LTCM would not have failed anyway, and the Fed’s concerns about the effects of LTCM’s failure on financial markets were exaggerated. In the short run the intervention helped the shareholders and managers of LTCM to get a better deal for themselves than they would otherwise have obtained.
The intervention also is having more serious long-term consequences: it encourages more calls for the regulation of hedge-fund activity, which may drive such activity further offshore; it implies a major open-ended extension of Federal Reserve responsibilities, without any congressional authorization; it implies a return to the discredited doctrine that the Fed should prevent the failure of large financial firms, which encourages irresponsible risk taking; and it undermines the moral authority of Fed policymakers in their efforts to encourage their counterparts in other countries to persevere with the difficult process of economic liberalization.
…
Too Big to Fail
The federal financial safety net is intended to protect large financial institutions and their creditors from failure and to reduce the possibility of “systemic risk” to the financial system. However, federal guarantees can encourage imprudent risk-taking, which ultimately may lead to instability in the very system that the safety net is designed to protect.
Last updated May 18, 2015
• A contributing factor to the financial crisis of 2007-08 was the government’s long history of emergency loans to distressed institutions and markets deemed “too big to fail.” This history has created an expectation that certain parts of the financial sector will be protected from losses.
• This government safety net effectively subsidizes risk-taking. Investors that feel protected by the government will be less likely to demand higher yields as compensation for risk, and creditors will feel less urgency to monitor firms that are implicitly protected.
• Excessive risk-taking makes firms more likely to experience distress and require bailouts to remain solvent. Additional bailouts can then further erode market discipline.
• This self-reinforcing cycle suggests that the safety net will grow ever larger over time. The safety net has increased by one-third since the Richmond Fed’s first estimate in 1999. It covered 60 percent of financial sector liabilities as of 2013.
• Resolution plans, or “living wills,” could be an important tool for establishing credibility against bailouts by making the government safety net the less attractive option in a crisis.
…
I worked at Deutsche Bank in 1998 when they got caught in the Russian Ruble meltdown. They went from AAA to AA within a few days. When we wanted to play with the NY trading desk, we’d call and ask them if they could dance the Ruble rhumba! That didn’t think it was very funny
From construction to finance and not a single base covered Jingle_Fraud.
iBankCoin
The Darkest Horizon Ever is Ahead
Tue Aug 11, 2015 9:24pm
4,616 views
One of you bedlamites had the audacity to quiz me as to how I could be so bearish today when I was exceedingly bullish yesterday. To answer this, I will present you with a scenario.
Imagine yourself a good upstanding citizen in a fine neighborhood. You talked to your friend Gladys just yesterday about how swell of a neighborhood it was, replete with the finest amenities money and position had to offer. You venture off from a late night nosh, alone, strolling near the park, amidst a view that has attracted the finest citizens this country has to offer, and has been doing so for the past 150 years.
Out of nowhere a man with a gorilla mask pops out from the trees and smashes you over the head with a large stick. He then takes your purse and leaves you with a stab wound from rump to stump. Well, that’s what China did to us last night and I don’t think I live in a nice neighborhood anymore.
The darkest horizon ever approaches, infused with Chinese black coal. It threatens to engross you in its rapture and reduce your life savings into saw dust. A confluence of significant events are converging, stemming from the disruption in the energy markets and ending in Beijing. Things are heating up in the Ukraine again and Obama has big ears and a small penis.
I’d like to tell you “everything is going to all right.” But it’s not. Many of you will lose fortunes, if you haven’t already. Donald “hair piece” Trump threatens to seize the presidency under the banner of declaring war on China and grape raping them into submission. These are not the days to be lax. You should be cautious.
We are living through the best days ever, with regard to scientific innovation and technological know-how. Then again, the 1930’s represented an era of rapid societal advancement, hamstrung by a mind-fuck of epic proportions. Once the confidence goes, all is lost.
Let’s review the cogs of this market.
Retail: dead
Energy: dead
Apple: Tianneman Squared
Semis: dying
Coal: bankrupt
banks: good
homies: milquetoast
industrials: f—-d
REITs: milquetoast
…
Didn’t Japan buy the United States just before they imploded and never recovered?
Yep.
Just like China has in the recent episode.
China’s wave of global property investment is just beginning
Florence Chong
12 Aug, 6:33 AM
Today’s global property market is sitting on the cusp of an unprecedented flood of capital now banking up in China in search of a new home offshore. And Australia, once again, is near the top of China’s wish list.
The impact of buying power of such magnitude is hard to fathom, simply because the world has never seen such a great wall of capital from a single country coming to the market all at once.
We are talking here about Chinese institutional capital, a far cry from the sometimes dubious sources of money that have been channelled from China into off-the-plan apartments and suburban homes in Australia and elsewhere.
This capital is disciplined. It seeks investment that will deliver stable income streams to meet future liabilities. Its investment criteria are no different to that of global and Australian institutional investors.
The objective is portfolio diversification to create broader sources of income.
The biggest pool of available capital belongs to China’s insurance companies. Since 2014, they have been able to invest up to 30 per cent of their total investible funds in infrastructure or real estate assets.
The top 10 insurance companies alone have a collective pool of some RMB 3.05 trillion ($667 billion) for investment in these two sectors, according to a study by global property firm Jones Lang LaSalle.
Darren Xia, Jones Lang LaSalle’s National Director International Capital Group, China, says 15 per cent of the total amount is permitted to go offshore to any of 45 markets.
But in reality, the Chinese institutions have targeted three regions — the UK, the US and Australia — as their preferred destinations. They are looking for deep, transparent markets in stable, developed economies.
Drilling further down, it would be more accurate to say they target gateway cities, rather than countries per se. Sydney and Melbourne have consistently showed up among their favourite gateway cities in successive global investment intention surveys.
They are also looking for landmark buildings that will allow them, if you like, to make a statement.
China’s Anbang Insurance is an example. Anbang paid $2.6bn ($US1.95bn) for one of New York’s best known landmark hotels, the Waldorf Astoria. Anbang is holding some RBM25 billion in investible funds and total asset of RMB125 billion.
China’s second-largest insurer, Ping An, bought a landmark building and a piece of history when it acquired the Lloyds of London Building for $441m (£210m) in 2013.
Xia points out that Lloyds of London is the only insurance exchange in the world still to book insurance transactions manually. The business has gone online everywhere else in the world. Lloyds embodies the history of the insurance industry.
China Life, China’s largest insurance company (with total annual premium income of US$52.9bn) stepped out last year to pick up a prime office tower at 10 Upper Bank Street in London’s Canary Wharf for $1.7bn (£705m).
In the first half of this year, Chinese institutions invested $7.8bn globally, and they are on track to spend up to $20bn before the end of 2015. If they reach that number, Chinese institutions will have doubled their spending in just two years.
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Realtors are liars.
You can say that again!
ok
UHS R rong.
Wikipedia
Last modified on 23 July 2015, at 15:41
1997 Asian financial crisis
The Asian financial crisis was a period of financial crisis that gripped much of East Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion.
The crisis started in Thailand (well known in Thailand as the Tom Yum Goong crisis; Thai: วิกฤตต้มยำกุ้ง) with the financial collapse of the Thai baht after the Thai government was forced to float the baht due to lack of foreign currency to support its fixed exchange rate, cutting its peg to the U.S. dollar, after exhaustive efforts to support it in the face of a severe financial over-extension that was in part real estate driven.
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Are there any crows left in New Mexico?
Ease up!
When ADan was posting here China was doing fine. As soon as ADan stopped posting then China went to hell.
Pray that ADan returns, and Save the Crows.
well he must of left his mark because at least people are talkn about him.
Did you follow his investment advice? That would leave a mark.
I always figured he was dispensing advice to encourage those on the other side of his trades to make foolish mistakes.
I might have been wrong.
He seemed so committed…. maybe he has been committed.
If you followed his advice you are a mark.
He believed his own sales pitch. So he’s probably living in a cardboard box right about now, drowning his sorrows with Night Train or Thunderbird.
I don’t mind a little “balance” (as he would say) or having devils advocate around here…but he was either talking up his investments or he enjoyed poking some of us in the eye.
I’m not a fan of either.
He was talking up the investments of his clients.
“He was talking up the investments of his clients.”
Which explains why he had to leave Dodge, FAST!
“I don’t mind a little “balance” (as he would say) or having devils advocate around here…but he was either talking up his investments or he enjoyed poking some of us in the eye.”
His self-appointed role was “comic relief.”
Let’s not forget my boots were on the ground in China this year.
I was in China in June as the stock market began to implode. (ADan…”the stock market weakness will make the Chinese economy stronger”) I’m sorry but WTH?
My wife’s relative’s companies business activity were all down.
(He ignored that bit of info)
I told the HBB that I was reading in Chinese press and I had read that that several mainland and HK economic indicators were down.
(He ignored that bit of info)
The Hong Kong press had mentioned they were seeing weakness from the mainland. Confirming mainland press.
(ignored again)
The Chinese press had mentioned that Shanghai and Shenzhen RE prices were up but the Chinese press even said that the previous stock market gains were a factor.
(ADan loved that data but ignored the stock market factor)
I said it was not all doom and gloom (at the time) as construction of infrastructure and many, but not all, skyscrapers continued. My relatives were pegging the growth at 4-6% (That 6% came from one optimistic Shanghai relative). The remainder were in the 4-5% camp.
Beijing is throwing everything, including the kitchen sink, since that trip. I would guess it is easily coming at <5%.
That may sound good compared to our 2% but the demographics in China point to needing 7+%
If growth cannot continue without the kitchen sink, then it will stop. It is only a matter of the cash burn rate. Cash seems to be leaking out of the place like a hemorrhage.
I don’t wish anything on China except discovery. They and the bankers have made everything we need more expensive over the past decade through the wasteful expansion of credit and building useless stuff. This while we celebrated supposedly saving a few pennies on cheap plastic crap while our neighbors lost their jobs. I am looking forward to the end of that chapter, which seems to be well underway.
Why China’s Yuan Devaluations Won’t Help Its Economy
By Simon Constable
08/12/15 - 08:50 AM EDT
NEW YORK (TheStreet) — China’s abrupt currency devaluations this week won’t save its economy. If the moves spark a bounce in stocks, then investors who have been burned by the tumbling Shanghai market, down 20% since the beginning of June, should use the opportunity to sell into rising prices. Or failing that, just dump Chinese stocks.
The reasons for weakening the Renminbi yuan are clear: To make China’s exports cheaper in terms of foreign money, most notably U.S. dollars. The problem is that while it may boost exports, there are other consequences that will do more harm than good.
“There’s a wealth of evidence across the emerging world that currency depreciation is followed not only by inflation but by reduced growth,” according to a report from consulting firm HCWE Worldwide Economics earlier this year.
The inflation effect occurs because imported goods, as well as anything priced in U.S. dollars like oil or copper, will be more expensive following a devaluation. That is a relatively well-known phenomenon. The bigger the devaluation, the higher the inflation, the HCWE report reiterates.
Inflation also sucks the life out of consumers’ wallets — when they spend more on essentials like food, there is less left to spend on other things. That won’t help with what China really needs, which is a shift from being an export-led economy to one, like America, which is fueled by consumer spending.
It gets worse. The HCWE report also highlights data from 1980 through 2012 that shows devaluations among emerging market countries are associated with lower real, or inflation-adjusted, economic growth. The bigger the devaluation, the slower the growth. Unfortunately, the moves by the People’s Bank of China, the Communist country’s central bank, are unlikely to be the last.
“I have repeatedly noted that Chinese officials will do ANYTHING to keep China’s economy from imploding,” Jeff Saut, chief investment strategist at Raymond James, writes in a recent report. “So why not a devaluation, or maybe two or three?”
In fact, Brown Brothers Harriman says that the gap between the so-called offshore yuan (which is traded in international markets) and the internal yuan points to further declines ahead.
If you follow the logic of HCWE, then more devaluations will mean higher inflation and lower growth.
And believe it or not, there’s actually more bad news: the possibility of capital fleeing the country.
“Capital outflow is the one major risk that China needs to monitor,” Brown Brothers Harriman says in a report. “We find that a one-off devaluation often leads markets to believe that another one may be delivered, sparking capital outflows and leading to a self-fulfilling prophecy.”
Put more simply, capital flight may ultimately cause to the next round of devaluation that investors feared.
…
So true Skye and Bear…
“The peasants did not support the workers, nor was it possible to mobilize them. On the whole, the army remained loyal, and the workers were virtually without arms. The liberal intelligentsia were terrified by the scale of the workers’ uprising. In hoping for a lasting revolutionary front, the social democrats had expected the impossible.” — Dmitri Volkogonov
Death Cross
What’s next the Death March…?
Death Spiral.
Hillary Clinton.
Prison term? Unlikely.
Does she warrant one? Possibly.
I am reading a biography of Trotsky, the part of the book where Stalin has all of Trotsky’s family systematically murdered before murdering him, and erasing him from the “official” history of the Soviet Union, is a good predictor of what will happen if Hillary Clinton is elected president, the Clintons have a trail of blood four decades long leading back to Little Rock…
I would still love to see her and Trump debate. By the way I heard Monica Lewinsky finally came out and said she would NOT support Hillary.
She said the last Clinton presidency left a bad taste in her mouth.
LOL
Goon:
You might like reading a book on Soviet espionage starting after WW1 called The Secret Wood. Good read.
Clinton Body Bags
Claim: Bill Clinton has quietly done away with several dozen people who possessed incriminating evidence about him.
FALSE
Origins: A new version of a lengthy list of deaths associated with Bill Clinton began circulating on the Internet in August 1998. According to it, there have been close to fifty suspicious deaths of colleagues, advisors and citizens who were about to testify against the Clintons, with the unstated implication that Bill Clinton or his henchmen were behind each untimely
We shouldn’t have to tell anyone not to believe this claptrap, but we will anyway. In a frenzied media climate where the Chief Executive couldn’t boff a White House intern without the whole world finding out every niggling detail of each encounter and demanding his removal from office, are we seriously to believe the same man had been having double handfuls of detractors and former friends murdered with impunity?
Don’t be swayed by the number of names listed on screeds like this. Any public figure is bound to have a much wider circle of acquaintance than an ordinary citizen would. Moreover, the acquaintanceship is often one-sided: though many of the people enumerated on this list might properly claim to have “known” Clinton, he wouldn’t know or remember having met a great number of them.
…
“Claim: Bill Clinton has quietly done away with several dozen people who possessed incriminating evidence about him.”
“Forget it, Jake… it’s Chinatown.” —Walsch
As punishment for her transgressions she will be sentenced to 8 years in the White House.
Prison is for the little people. Our Overlord betters fall under a separate legal code that guarantees impunity or slap-on-the-wrist fines. Bleat after me: Two legs good, four legs bad!
Free Jon Corzine!
So why again did General Petraeus resign in disgrace and plead guilty?
“Equality under the law”
only the media (corpss) likes her.
Bernie (with out the raise in min wage) 2016~!
Was 7/5 the peak as some predicted?
Me for one
While I have always assumed that stupidity is an irreversible condition, and that the same lemmings who fell for hope ‘n change would naturally fall for Hillary’s “middle class champion” line of BS. However, as Bernie’s support surges, it appears a growing number of Democrats - who by definition are amoral and stupid - are turning on her. Could my assumptions, re, the immutability of stupidity, be flawed?
http://www.zerohedge.com/news/2015-08-12/hillary-clinton-turns-over-e-mail-server-feds-bernie-sanders-surges-ahead-new-poll
bernie should bow out now. He reminds me a little of colonel sanders. He is no jfk my friend.
He’s not Hillary.
He has that nice Al Gore being managed by handlers and told what to wear uncomfortableness going on now.
Like Jesus, he was a Carpenter.
Has the commanding physical presence of Ron Paul.
“He reminds me a little of colonel sanders.”
Ahhh, how fitting- a howmuchamonther voting based upon looks. And we wonder why this country is doomed?
I posted here yesterday that Bloomberg reported that Hillary has an 80% favor ability rating among black voters
It will be 100 percent, both of them.
‘who by definition are amoral and stupid ‘
You can say that about anyone who is invested in the 2 party system.
Instead of making assumptions about Democrats, maybe you should actually GO to DailyKos and read a few diaries and comment threads. Wallow in the correct grammar, complete sentences, and logically constructed arguments. But of course, you won’t do that. You’ll just say you don’t need to read because you already “know” what Dems are like.
So I’ll sum it up for you: very few Dems like Hillary. They only support her because she’s not the Republican; just someone who at least won’t F up the Supreme Court. DailyKos battles this issue daily: “I can’t stand Hillary, she bows to Wall Street”…. “but she’s all we have…”… “screw this I support Bernie…” …”oh so you want another Bush in the White House?…” and so on.
But she isn’t actively liked (except for the few elderly feminists who are still hitched to the woman’s movement of the 60’s). That’s why Dems jumped on Obama and are now jumping on Sanders. Thank goodness, a non-Republican that’s not Hillary.
I think the most fun will be had if both Sanders and Trump stay on the ballot all the way through. Sanders can grab Warren and Trump can find some good-looking woman (doesn’t matter who). That would be the race of the century.
Complete sentences? Correct grammar? What madness is this?
Two legs bad! Four legs good!
Two legs bad! Four legs good!
Two legs bad! Four legs good!
Two legs bad! Four legs good!
“You’ll just say you don’t need to read because you already “know” what Dems are like.”
Yes. Sexual predators looking for an out, empty pockets looking for more free stuff.
I went to the Drudge Report website for today’s TwoMinutesHate and surprisingly, there are only three links about ISIS and Iran, and they are buried at the very bottom of the middle column
Rallying the base
Scripting a narrative
It’s really frustrating, because after getting so emotionally invested in hating what Sheldon Adelson purchased for me to hate, now it feels like the rug was pulled out from under my feet
Fortunately, there’s always the Weekly Standard and World Net Daily
There there, Goon. Turn on any cable channel or go to any Oligopoly-owned media site and your fear lobe will light up like a Christmas tree.
Fox News (not real journalists) has “wounded Iraq veteran speaks out against Iran deal” and New York Times (real journalists) has op-ed “who threatens America most?” and Washington Post (real journalists) has “ISIS affiliate in Egypt claims hostage beheading” but on all three the articles are buried
I can’t get rallied if I have to squint, I need my TwoMinutesHate in large type bold font! And I’m still waiting for an explanation of how Scott Walker’s ground invasion of Iran on the day of his inauguration will result in “smaller government” and “lower taxes”
The veteran was from some neo-con oligarch-funded astroturf outfit formed to oppose the treaty with Iran. Like endless warfare in the Middle East is preferable. Onward Christian Soldiers!
PBOC freakout continues.
http://wolfstreet.com/2015/08/12/after-one-time-correction-freaked-out-peoples-bank-of-china-pboc-devalues-yuan-second-time-mayhem-breaks-out-currency-war/
Hobbs pd commercial - YouTube
http://www.youtube.com/watch?v=im66lCgZrbc - 230k -
The disturbing messages in police recruiting videos
By Radley Balko April 16, 2014
According to the New Mexico Watchdog Web site, this is a new recruiting video being used by the police department in Hobbs, New Mexico.
Note the aspects of policing the video emphasizes: Shooting stuff. K-9 enforcement. Nabbing the bad guys. The SWAT team. This is the first step in the process.
(There’s also the separate but related question of why Hobbs — a town of 35,000 people — needs a SWAT team in the first place. As the Watchdog reports, the SWAT team has its own page on the Hobbs department Web site, complete with a video of SWAT cops shooting and destroying things, set to heavy metal music. The statement in the video that “The rules of engagement of SWAT are simple: Defeat the enemy . . . any way you can” is also troubling. The mission of a SWAT team ought to be to resolve volatile situations without force and violence whenever possible.)
Note, too, what’s missing from the recruiting video: Public service. Cops walking beats. Community policing. Helping people.
Now ask yourself: What sort of person would be attracted to a career in law enforcement based on the images and activities depicted in that video? And is that the sort of person you’d want wearing a badge and carrying a gun in your neighborhood?
The video isn’t disturbing only because of the type of police officer it’s likely to attract. It also suggests that the leadership in the Hobbs police department believes that these are the aspects of police work most worth touting — that this is the face they want to project to the community.
Hobbs isn’t alone in this. It’s a trend in policing that I’ve covered for a few years and part of a general move toward more aggressive, militarized police forces. There are many other examples. Here’s one from Gainesville, Fla.:
https://www.washingtonpost.com/news/the-watch/wp/2014/04/16/the-disturbing-messages-in-police-recruiting-videos/
Everything these days is about more money and fancier and fancier cupcakes. Whether cops, schools, houses, military, whatever. Somebody is making big bank selling this stuff.
Citizen! Please comply with our requests to trample on your Constitutional rights, or we’ll be forced to protect and serve the hell out of you….
Right out of ‘Robocop’!
This may help put the tone of their recruiting video into better context:
http://www.usa.com/hobbs-nm-crime-and-crime-rate.htm
The Hobbs NM crime index is even higher than Albuquerque! Still better than Espanola NM though, so at least they have a more wretched town to look down on. Seriously, this is a very dangerous place and it shouldn’t surprise anyone the local police departments are trying to recruit people drawn to aggressive action. Just be happy we don’t have actual death squads like other third world locales. Yet.
Look out below! Ponzi markets and asset bubbles are looking fragile.
http://www.businessinsider.com/albert-edwards-rest-of-the-world-will-import-deflation-from-asia-2015-8
Gimme a “D”!
Did the PPT set things right on Wall Street today after the early-morning blowout?
Anybody here seen my old friend Cecil?
Can you tell me where he’s gone?
He ate a lotta Zebra but it seems the good they die young
I just looked around and he’s gone
Calls For Smithsonian To Remove Exhibition Honoring Racist Planned Parenthood Founder
Sanger, who spoke of ‘exterminating the Negro population’, honored as “champion of justice” alongside Rosa Parks, MLK
by Steve Watson | InfoWars | August 12, 2015
A group of black pastors are calling for the Smithsonian Institution to remove a bust of Planned Parenthood Founder Margaret Sanger, noting that in the wake of the current Planned Parenthood scandal, it should also be remembered that Sanger was a eugenicist and a racist.
The bust of Sanger appears in the National Portrait Gallery at the museum as part of an exhibition titled “Struggle for Justice.” The historical figures featured, including leading figures of the civil rights movement Rev. Martin Luther King Jr., and Rosa Parks., are described as “champions of justice.”
A letter penned by a coalition of pastors known as Ministers Taking A Stand states:
“Perhaps the Gallery is unaware that Ms. Sanger supported black eugenics, a racist attitude toward black and other minority babies, an elitist attitude toward those she regarded as ‘the feeble minded;’ speaking at a rally of Ku Klux Klan women; and communications with Hitler sympathizers,”
The bust at the Smithsonian, even cites Sanger’s eugenicist ideology, and admits that founder of what would go on to become the nation’s largest abortion provider, targeted minorities.
Can we get a rewrite of Alice Cooper’s “Dead Babies” please?
Dead babies = good
Racis = bad
“Sanger was a eugenicist and a racist.”
Good for those pastors remembering history.
in the wake of the current Planned Parenthood scandal
Scandal? what scandal? Here, let me fix this:
in the wake of the current Planned Parenthood manufactured scandal
The organization has been a complete scandal from its inception.
“Scandal? what scandal? Here, let me fix this:”
Any talk top officials of Planned Parenthood discussing, and even laughing about, the harvesting of baby organs, or doctors acting as negotiators as they dicker over the price of a fetal liver, heart, or brain, and then talk about how they meticulously go to the trouble of not crushing the most valuable body parts is disrespectful to the memory of Cecil the Lion.
Most of that was taken from an article written by Ruben Navarrette Jr.
http://wtop.com/montgomery-county/2015/08/black-lives-matters-sign-vandalized-in-bethesda-again/
Is abq Dan still coming around? I distinctly remember him telling me after one China/oil exchange that I would ‘leave this board with my tail between my legs never to return.’
Things are definitely getting weird in the markets.
After his obsessive posting of “Everything is Awesome” Chinese propaganda claims, the least he could do is own up to being wrong, as 99% of the posters here helpfully pointed out every time he posted.
Each neo-con politician and voter should be required to host a refugee family in their home so they can live with what they’ve created in the Middle East.
http://www.independent.co.uk/news/world/europe/police-on-greek-island-of-kos-use-batons-and-fire-extinguishers-in-fights-with-migrants-10450571.html
Trump calls out Bernie for his gutlessness in letting two ratchet “activists” hijack his microphone.
http://www.cnn.com/2015/08/11/politics/donald-trump-2016/
tj sotomayor (black man) rants on the Bernie Sanders shutdown by BLM. Caution: VERY strong language
https://www.youtube.com/watch?t=16&v=LLWjmFVmD4w
Is the Bureau of Land Management back up to their old tricks? I heard Bernie had a call into Clive Bundy to consult on BLM issues.
I hear the Oath Keepers are available to provide security.
The smart Oathkeeper would get himself into that Hobbs police force (see recruitment video). Fat pensions abound!
Sanders must be doing well in Trump’s internal polling for Trump to even acknowledge Sanders.
When is the next White Crowds Matter rally for Bernie Sanders?
Never mind, it’s being handled.
Rapper drops Clinton for Sanders
By Deena Zaru, CNN
Tue August 11, 2015
Washington (CNN)California rapper Brandon McCartney, known by his professional name Lil B The Based God, released a track last year expressing his love and respect for Bill Clinton.
And in his ode to the former President, titled “B—- I’m Bill Clinton,” he raps a sort of endorsement for Hillary Clinton even before her 2016 presidential bid was announced: “Shout-outs to Hillary Clinton. You gonna win that presidency.”
But last month, Lil B took that endorsement back, and in a series of passionate tweets, he publicly endorsed Bernie Sanders, saying, “As much as I want to a woman leading the USA, right now it’s all about Bernie … he’s the real he loves us.”
The 25-year-old rapper is a former member of the San Francisco rap crew The Pack, who were best known during the mid 2000s for their Billboard-charting hit “Vans.” He is outspoken about racial inequality, the criminal justice system and poverty in both his freestyle lyrics and as a motivational speaker, and he has given lectures at universities including MIT, UCLA and NYU.
In an interview with CNN, Lil B explained why he switched his allegiance from Clinton to Sanders, his take on the black vote in the 2016 race and the “Black Lives Matter” movement.
http://www.cnn.com/…/lil-b-based-god-black-lives-matter-clinton-sanders/index.html - 366k -
Did his nine fans switch with him?
Citigroup says markets are bonkers because people have become cattle, and when the herd shifts there will be no liquidity.
http://www.bloomberg.com/news/articles/2015-08-12/citigroup-something-big-and-fundamental-has-changed-in-markets
World Net Daily pauses from rallying the base of Huckabee voting sister diddlers to report on King Obama the Race Hustler in Chief:
http://mobile.wnd.com/2015/08/obama-using-race-riots-to-stir-up-political-base-author-charges
Huffington Post changes the sheets on its soggy mattress for this opinion piece written by old school original Race Hustler Jesse “Shakedown” Jackson:
http://www.huffingtonpost.com/rev-jesse-jackson/police-shootings-are-about-class-as-well-as-race_b_7972218.html
The China devaluation move has had a very beneficial effect so far on gasoline affordability. Costco regular price is dropping fast towards the $3 level.
Nice price for CA.
I paid $2.29 here in Dallas over the weekend. I gas my commuter car up once a month, whether it needs it or not.
From my early morning fill-up today:
http://picpaste.com/pics/20150812_062838-W81UouMO.1439393269.jpg
We were over $4/gal in recent memory!
Have ‘Muricans finally had enough of corruption and crony capitalism?
http://www.businessinsider.com/poll-bernie-sanders-hillary-clinton-new-hampshire-2015-8
From the article: The poll gives Sanders a 44-37 lead over Clinton in the run for the Democratic nomination in the state.
I said long ago here that if Bernie gets over a certain level and looks viable, look out Hills. It’s all happening.
Heh, palmetto’s conspiracy theory take:
The email scandal will heat up and Hillary will withdraw.
Joe Biden will enter the race as Obama’s pick.
Biden would be a big improvement on Hillary. He’s a doofus, but he’s reasonably intelligent and not the essence of pure evil like she is.
My guess is that BLM stunt was orchestrated by political opponents, the Jessie Jackson type who will do anything for money. Seriously of all the candidates why choose a guy who marched for civil rights. My guess is we will be getting a lot more innuendo inflammatory press coverage. If all else fails His health and age will become an issue and then Bernie could have a heart attack. Even if elected the corporatists control every other branch of government so he’d lame duck on day one.
44 to 37, that’s a paddlin.
This must scare the bejeebus out of the oligarchs, the Kochs, the big bankers:
http://cdn.inquisitr.com/wp-content/uploads/2015/08/Bernie-Sanders-president-665×385.jpg
This is not a Democratic rally — it’s a Socialist (Gasp!) drawing a SRO crowd of 28,000 in the L.A. Sports Arena, all of them calling for the heads of oligarchs to pay for what they have done to the middle class.
You can’t blame the Oligopoly for experiencing cognitive dissonance. After all, in 2008 and 2012, 95% of the ‘Murican bent over for them and spread their cheeks by voting for Obama, McCain, and Romney. So they had a solid mandate for their massive swindles against the 99%. Now Bernie comes along, and the same fools who sanctioned crony capitalism and corruption are suddenly turning their backs on HillaryJeb. It’s all very confusing.
If these poors can’t afford childcare maybe they should have used birth control:
http://www.bloomberg.com/news/articles/2015-08-12/-broken-childcare-economics-slamming-younger-u-s-households
Or they could use some common sense. What the hell is the point of working outside the home when they are forking over $2100 a month in child care expenses? You’d have to make around $17/hr before taxes, full time, just to break even with your outsourced child care. It doesn’t seem like a very intelligent trade off for a dual income couple unless they are making way, way more than that. In which case they aren’t poor, so boo-friggn-hoo.
“We’ll eat out a lot less, and have a lot less discretionary spending. We live in an apartment building and I don’t think there’s any way we’d be able to afford a home and pay for daycare and pay for student loans.”
Welcome to the real world, Amber Sparks.
Asterix of history Lindsey Graham needs more death and war on borrowed dollars:
http://thehill.com/blogs/ballot-box/presidential-races/250949-graham-bush-woefully-inadequate-on-isis
Lindsey, how about you go f* yourself, mmmkay?
Looser!
if a state can’t do ch9
what will ILLANOY do ?
Illannoy would then tax the bejeebus out of itself, most likely pass pot laws and find anything that isn’t nailed to the floor that can be sold.
This place is circling the drain faster by the day.
Chinese goods even cheaper now. Oil headed to $30 a barrel!
Get your 80″ LCD TV now to watch Dancing With The Stars and the Ferguson Riots.
Forget a TV; my friend informed me just last night that he’s been using a smartphone app called Periscope which allows people to live-stream video right from their smart phones.
He has spent a bunch of time watching the latest Ferguson kerfluffle from the point of view of several, er, participants, yeah, that’s it! It’s the new reality TV.
Bush’s Great Recession
Obama’s Pseudo Recovery
Bernie’s Uber Recession
Your local, crazy Hospital is home to all the most violent pedophiles in the State is the only employer in town.
http://www.zillow.com/homedetails/5720-Olmeda-Ave-Atascadero-CA-93422/2101775582_zpid/
$39k price cut.
Second cut:
08/12/15 Price change $340,000-10.5% $382
07/18/15 Price change $379,900-2.6% $427
07/07/15 Listed for sale $390,000 $439
And it’s a dump.
super dump and tiny! Good one to follow to see what it finally sells for. $230k?
Offer’em two dimes a nickel and a penny. Bout all it’s worth.
I wish I knew what I know now
When I was younger…..
I wish I knew what I know now
When I was stronger….
Ooh La la by the Small Faces - 1970’s ish.
Did I say yet today that I loathe Millineals?
Have a great evening.
If I knew what I know now when I was younger I wouldn’t have had anywhere near as much fun as I did.
Any thoughts on how much farther oil has to fall before reaching the ground?
fastFT
MarketsBrent nears January low as oil drop quickens
a day ago
Another day, another big drop in oil prices.
Brent crude, the international benchmark, fell $1.63 to $48.78 a barrel in afternoon trading, close to its January low.
West Texas Intermediate, the US marker, lost $1.90 to $43.06 a barrel, the lowest it’s fallen to since March, reports Anjli Raval, oil and gas correspondent.
The market was reacting to a bearish assessment of the oil market put forward in Opec’s monthly report published on Tuesday, that pointed to a persistent glut that failed to be sopped up even with an uptick in global demand.
Despite a drop in Saudi oil production, Opec output overall continued its upward move to the highest since 2012.
Iraq, Iran, Angola and the UAE all reported sizeable increases in production in July.
The cartel was hopeful for a drop in output from rivals outside the producers’ group (such as from the US, Russia, Canada etc) earlier this year.
This was the motivation behind the November Opec decision to maintain, rather than cut output, believing high cost producers outside the cartel would be the first to blink amid lower prices.
But the group, in fact, raised the forecast for non-Opec production, which is proving to be more resilient than expected in the face of prices that are down by more than half since June last year.
…
crater
there is a recovery somewhere!
Tianjin, which experienced some kind of huge detonations, is the number ten port in the world by volume. Wonder how that’s going to impact supply chain management for Wal-Mart.
http://www.zerohedge.com/news/2015-08-12/caught-tape-mushroom-clud-forms-after-massive-explosion-rocks-chinese-port-city
The drumbeat of bad news out of China continues. Oh Brother Dan, where art thou?
http://www.marketwatch.com/story/lenovo-to-cut-thousands-of-jobs-as-profit-plunges-2015-08-12?link=MW_latest_news
Not again: Report finds Nevada homes among most overvalued
The rental we left has been on the market for one month today.
Where’s our degenerate gambler ’software engineers’?
Who would move to a non pony country? - YouTube
http://www.youtube.com/watch?v=0RDLqb3umsw - 238k -
Vancouver residents, infuriated by foreign (Chinese) buyers inflating prices beyond the reach of locals, are pushing back.
http://www.businessinsider.com/this-housing-bubble-is-ready-to-pop-2015-8