Bits Bucket for August 22, 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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Did your commodities get hammered again this past week?
I don’t know. I was too busy listening to Trump say he would impose 35 percent tariffs on companies that moved plants down to Mexico.
Looks like someone is finally appealing to the working man Reagan democrats.
Unfortunately he has no ideas how to make any of that stuff happen.
That’s an unimportant detail during campaign season.
Executive orders allow all now.
Even more unfortunate, it’s all empty rhetoric and the moneyed interests are in full control.
Trump say he would impose 35 percent tariffs on companies that moved plants down to Mexico ??
Perot told us this would happen…Nobody seemed to care…I wonder if they care now…
Perhaps Trump is your chance to vote for Perot again, take a Mulligan.
The only real question now is how are they going to get to Trump?
Perot told us this would happen…Nobody seemed to care…I wonder if they care now…
Nobody cared, because 95% of the ‘Murican electorate are too stoopid to care. Same as it ever was.
Last I checked, that “nobody” was 19%.
Not gonna happen since he didn’t read off the teleprompter.
They are all about initiation of force. 2012 Ron Paul was our last hope.
The sell-off in commodities
Goodbye to all that
A decade of bingeing on raw materials may leave an even longer hangover
Aug 22nd 2015 | From the print edition
Timekeeper
IT WAS only a decade or so ago that Scotland was hit by the “Great Drain Robbery”, the disappearance of 50 manhole covers in Fife. It gave an inkling of the emergence of a new era in commodity markets, spurred by insatiable demand from China. Scrap-metal prices—and so scrap-metal thefts—soared. Africa was over-run by Chinese engineers; Australia elected a Mandarin-speaking prime minister; and emerging markets from Argentina to Zambia relished the rising values of their farmland and mines. The boom was fanned by a weak American dollar, the currency in which most stuff that comes out of the ground is priced.
The gears have now gone into reverse. A resurgent dollar has hammered commodity prices: many have recently fallen below their levels of a decade ago. That is a fate not shared by other tradeable assets: not since the late 1990s have commodity prices been so weak compared with shares (see chart 1). The American economy is strengthening, but by no means enough to encourage thieves to filch bronze bells from Chinese temples to send as scrap to the United States. The impact of its recovery is dwarfed by slowing demand in China, which still consumes about half the world’s metals such as iron, aluminium, and zinc.
The real curse for producers is over-supply in almost all raw materials. Yet they continue to act as if they are blithely unaware of it. Capital is still pouring into holes in the ground, creating a hangover that may last at least a decade. Jeff Currie of Goldman Sachs, a bank, says past cycles suggest it can take up to 15 years to work through the over-investment. “The world has just flip-flopped,” he says.
…
CREDIT BUBBLE.
Aug 21, 2015 @ 12:01 AM
Is The Worst Over For Commodities? Check This Chart
Panos Mourdoukoutas
I cover global markets, business and investment strategy
Investors sifting through commodity charts to figure out whether the worst is over for commodities probably have missed a chart that paints a bleak long-term picture for commodities — a secular decline in capacity utilization, which dates back to the late 1970s.
What’s behind this trend? Unprecedented monetary easing and ultra-low interest rates for a prolonged period of time, in our opinion.
Monetary easing and lower interest rates are usually bullish for commodities. They are followed by higher capacity utilization, which fuels inflationary expectations, and higher commodity prices.In a world of conventional economics, that is, where monetary policy is launched in a “normal” interest rate environment, and capital markets determine asset allocation.
But the world we live in is not conventional. It is a fantasyland where several rounds of conventional and non-conventional monetary easing have resulted in an ultra-low low interest rate environment in which central banks determine asset allocation. That’s especially the case since the Great Recession.
In this world, new rounds of monetary policy are bearish for commodities. They are followed by lower levels of capacity utilization, which depress commodity prices.
Global markets tumble as commodity prices fall into ‘death spiral’
Britain’s benchmark index falls into correction territory as US stocks suffer biggest fall since February 2014
A large computerised display of the British FTSE 100 index is pictured in London
The FTSE 100 has slid into correction territory
Photo: AFP
By Tara Cunningham, and Szu Ping Chan
11:32PM BST 20 Aug 2015
The FTSE 100 fell into official correction territory on Thursday, one point shy of January’s year-low hit, after an eighth consecutive day of losses.
Fraught with concerns about slowing growth in China and the after-effects of last week’s devaluation of the yuan, investors fled to the side lines, bringing this week’s losses to 2.5pc. The FTSE 100 closed 35.56 lower at 6,367.89.
Britain’s benchmark index has now fallen by 10.4pc since a high in April of 7,104 to officially tumble into correction. The rally earlier this year was driven by quantitative easing in Europe. However, the index has since been plagued by political instability in Greece and the slowdown in China.
US stocks also tumbled on Thursday. The Dow Jones industrial average fell below the psychologically important 17,000 level, finishing down 2pc at 16,990.69, while the broader S&P 500 suffered its biggest fall since February 2014, closing down 2.1pc, at 2,035.73.
David Madden, of IG, said: “It used to be just Australia that would catch a cold when China sneezed, but the Chinese sell-off is far more infectious than initially thought.”
The move by the People’s Bank of China last week has rocked equity markets with commodity stocks coming under significant pressure, as investors fear demand from China, the world’s largest metals consumer, will be hit. The FTSE is heavily weighted towards the commodities sector.
Fears over Chinese growth and a supply glut have pushed commodity prices lower in recent months, which has also acted as a drag on emerging market currencies.
Analysts at Societe Generale said this could hamper central bank efforts to steer ultra-low inflation rates higher. “Emerging market currencies and commodity prices are in a ‘death spiral’ that is destroying central banks’ efforts to bring inflation back to long-term targets,” said Vincent Chaigneau.
“Emerging market currencies may well stay depressed for longer as [Asian ex-Japan] currencies now contribute more forcefully to the rout.”
…
Noteworthy milestone:
The MSM has finally caught on to the wide scale implications of the China growth slowdown story which has been frequently discussed here all year long.
Burned by slump, commodity bulls exit in search of better return
Luzi Ann Javier
Bloomberg News
Published Friday, Aug. 21, 2015 1:14PM EDT
Last updated Friday, Aug. 21, 2015 1:16PM EDT
A decade ago, Alan Gayle at RidgeWorth Investments was among the money managers pouring cash into commodities as a way to profit from China’s expanding appetite for energy, metals and food.
Now, with China slowing and global surpluses in everything from crude oil to grains, almost none of Atlanta-based RidgeWorth’s $43-billion is invested in raw materials. And Mr. Gayle, the director of asset allocation, has no plans to return anytime soon.
Canada’s banks report their third-quarter earnings next week, after a quarter characterized by low oil prices, low interest rates and lots of questions about the health of the Canadian economy. Paul Bagnell has more.
“The macro fundamentals appeared to have peaked out,” said Mr. Gayle, 61. “The bears are in charge.”
Commodity prices that reached record highs in 2008 are the lowest in 13 years, and investors are bailing. Just 2.9 per cent of money in exchange-traded funds as of Aug. 17 was tied to raw materials, compared with 10 per cent at the end of 2011, when the slump began, data compiled by Bloomberg show. Commodity-related assets tracked by Barclays Plc shrank by 38 per cent through the end of 2014, from a peak two years earlier.
“Anything but commodities at this point,” said Tushar Yadava, an iShares investment strategist in San Francisco for BlackRock Inc., the world’s biggest money manager. “After a super cycle in commodities, its natural to see some clients chase returns in other asset classes.”
…
“Other asset classes”
Foreclosed Las Vegas houses and Florida condos are where the smart money is buying, or so says the NAR.
This is going to leave a mark.
Commodity Rout Erases $2 Trillion From Stock Values
Prices have plunged after years of overinvestment led to a supply glut at the same time that economic growth is slowing in China
Isaac Arnsdorf
August 20, 2015 — 12:01 PM PDT
The value that commodity producers have lost in the past year almost equals India’s entire economy.
Slumping prices for raw materials have wiped out $2.05 trillion from the shares of mining and oil companies since the middle of last year, data compiled by Bloomberg show. That compares with India’s $2.07 trillion gross domestic product.
…
ft dot com > Markets >
Commodities
Last updated: August 20, 2015 3:08 pm
Commodity surpluses set to rise as renminbi helps China producers
Henry Sanderson
Renminbi slide set to boost domestic production
Workers walk by piles of iron ore at a transfer and storage center operated by the Shanghai International Port Group at the Yangshan deep-water port in Shanghai, China, on Tuesday, Jan. 26, 2010.
Photographer: Qilai Shen/Bloomberg
China’s weaker currency could help producers of some commodities in the country who are struggling to survive as prices move below the cost of production.
The renminbi made its biggest single-session decline in two decades after a surprise devaluation last week. It followed the direction of other emerging market currencies, which have fallen to their lowest level since 2010, according to an MSCI index.
Along with weaker oil prices, the pattern is helping miners operating at the so-called marginal cost of production, who are only just making a profit at current prices.
A weaker currency raises the cost of imported raw materials, making domestically produced resources more attractive. For China, it could mean a boost for coal, iron ore and aluminium production.
The extent of the effect of a weaker renminbi will differ for each commodity. China accounts for more than half of the world’s production of aluminium and steel and over 70 per cent of thermal and metallurgical coal, according to Macquarie. But it only produces 10 per cent of the world’s iron ore, a key steelmaking ingredient.
All these materials are already in oversupply, which has driven prices down. Aluminium prices hit their lowest level in six years this week, while coal futures are at a 12-year low. A weaker currency effect, therefore, could temporarily send prices even lower as supply keeps growing.
“In a situation where we are dealing with oversupply of commodities and where Chinese mines are often the marginal producer, any devaluation of the renminbi makes removal of marginal supply harder,” says Paul Gait, an analyst at Bernstein.
…
Does it seem like there is a perfect storm of collapsing commodities demand, rising surpluses, and crashing prices?
An imminently-predictable “perfect storm”, as it were, given that intentionally-distorted demand signals led to massive mis-pricing of commodities, which led to massive over-investment in capacity.
Now we get to enjoy the flip-side of that coin: real demand signals eventually re-assering themselves but intersecting massive over-supply yields massive surpluses and crashing prices.
I expected it about 3yrs ago, but it is always harder to predict the timing than the direction.
“…real demand signals eventually re-assering themselves but intersecting massive over-supply yields massive surpluses and crashing prices.”
It sucks to be a bull at the point when a tsunami wall of economic reality washes away years of bubble price gains!
Are you starting to feel that stocks are a bad investment?
markets
How low the stock market can go
Matt Krantz, USA TODAY
11 hours ago
Traders work on the floor of the New York Stock Exchange (NYSE) during the trading day in New York, New York, USA, 20 August 2015.
After seeing 6% of their money evaporate this week to drop 8% from the recent highs- investors are wondering how much uglier things can get. The answer is: much.
The Standard & Poor’s 500 fell another 3.2% Friday - dragging the index down below 2000 at 1970.89. Seeing such a rapid decline is a reminder this bull market has gone untested for too long and the pain could get worse - much worse to bring valuations back in line with reality.
“There will be more wringing out of this market. There’s been too much optimism,” says Chris Johnson of JK Investment Group.
Trying to guess how low a market under pressure can go is far from precise. Markets can overshoot on the downside just as they can soar too much on the upside.
…
Overcapacity. Misallocation of resources. Artificial price floors. Cheap easy credit.
Other than that everything is fine.
Nutt’n compares to our free market.
Public Private partnerships are simply tools for graft.
Here’s a 20 year Dow chart (linear, not log):
http://picpaste.com/150821_dow_20yr_history-6DUFoxfY.png
Looks like there’s a lot of opportunities for profit taking. If players think the top is in, they’re going to try and cash out their winnings.
On the other hand, there’s always 401K money rolling in, buying automatically at whatever price there is.
Also note trading volume is that of the late 90s.
I am putting another ten or eleven years of money into 401k and IRA (if I am blessed by the Flying Spaghetti Monster to work another 11 years). Pure stock funds, undercurrent rules.
Market ‘aftershocks’ are coming: Robert Shiller
Zack Guzman
20 Hours Ago
CNBC.com
Historically valuations are high: Robert Shiller
Nobel Prize-winning economist Robert Shiller has warned for months against being overexposed in an overheated market.
And with the major U.S. averages pacing to cap their worst week of the year Friday, it certainly appears to be a well-timed caution, but Shiller isn’t saying it’s over yet.
“It could be followed by even bigger and bigger moves,” he told CNBC’s “Squawk on the Street” in an interview. “I have a general bias towards down because the market is overpriced, but these things unfold over years.”
While Shiller conceded the possibility that the selloff could “create aftershocks in either direction in the short-term,” he highlighted a psychological bias for those in the periphery to “over focus on the latest news.”
“When people who don’t normally pay attention to the market are brought in, it can feed on itself like an epidemic,” he said.
…
Meanwhile, Keynesian lunatic Krugman calls for, what else, more debt serfdom.
http://www.zerohedge.com/news/2015-08-21/paul-krugman-what-ails-world-right-now-governments-aren’t-deep-enough-debt
Krugman is right. We’d be better off if we’d listen to him. But then, what do you know? You’re a movie character, just like Tyler Durden.
We did. And it failed. Silly PovertyQueen.
‘Krugman is right. We’d be better off if we’d listen to him’
Right, but let’s let him know this; if a phony space alien invasion is your economic plan, you shouldn’t tell the public about it or they might not revive the A shares.
Krugman’s idea is intriguing: increase the volume of treasuries issued until bond investor demand is met. Once the demand is met, bids will fall and interest rates will rise back up to a normal, healthy level. Savers would like that. The government can take all of those proceeds and rebuild our infrastructure. This would do a better job of stimulating jobs and growth than handing a bunch of cash to major banks through the QE window.
While I still think Krugman is an idiot (space aliens will save us!), I have always thought that real projects building real infrastructure would have been dramatically-better stimulus to put into place since the beginning of this downturn.
QE is just intentional mis-pricing of everything, not real stimulus.
“Krugman’s idea is intriguing:”
It’s the intriguing ideas out of Princeton Economics Department faculty members that led to the mess we are in today.
WPA:: Krugman’s idea is intriguing: increase the volume of treasuries issued until bond investor demand is met. Once the demand is met, bids will fall and interest rates will rise back up to a normal, healthy level. Savers would like that. The government can take all of those proceeds and rebuild our infrastructure. This would do a better job of stimulating jobs and growth than handing a bunch of cash to major banks through the QE window.
What would happen if a smaller country tried this? Say… Guatemala. Or Brazil?
What would be the difference in outcome and why?
One problem I see is that while bond investors may become satiated when they’ve exhausted their resources buying US debt, is that the US economy will be heavily built around the issuance of this debt. Stopping it wouldn’t be pretty.
The economy is like a plant. Money is like light. It grows to the light.
While I still think Krugman is an idiot (space aliens will save us!), I have always thought that real projects building real infrastructure would have been dramatically-better stimulus to put into place since the beginning of this downturn.
Clearly you miss the whole point of the Fed, which is to enable the Oligopoly to amass all wealth and power into its own greedy hands. Building infrastructure does not serve that objective, unless an oligarch construction magnate gets a 90% cut of the funds, so the Fed will continue gifting free trillions to its TBTF bankster handlers.
Could be something worse than “aftershocks.” Could be a fraud-riddled financial system entering its terminal phase.
http://theeconomiccollapseblog.com/archives/we-have-already-witnessed-the-first-1300-points-of-the-stock-market-crash-of-2015
Shiller definitely has a point about psychological contagion due to MSM propagation of stock market crash news.
Case in point: The headlines of the dead-tree edition of our local fish wrap, UT-San Diego, which normally focus on local interest stories about Padre’s baseball or conflicts between seals and swimmers in La Jolla swimming holes, today scream the stock market decline in large, bold print. People who just yesterday thought all was well are now wondering whether they will have enough money in their 401(k) accounts to retire before they turn 80 years old.
“People who just yesterday thought all was well are now wondering whether they will have enough money in their 401(k) accounts to retire before they turn 80 years old.”
They won’t.
I am thinking if the incredible Gods running our government force all 401ks to go into short term gubment securities paying paltry yields I would simply switch my non retirement accounts into stocks. The more aggressive the bettet.
in Hungary the gov stole 80% of 401k private savings
2012
Which is why I have precious metals in physical form, and Bitcoin.
90% cash 3 weeks ago.
yeah right u have been in cash your whole life.
Falling prices my friend.
I was looking at my just-received annual report of my AB Municipal Bond Fund II. This has funds focused in Arizona, Massachussets, Michigan, Minnesota, New Jersey, Ohio, Pennsylvania, and Virginia. All of them seem focused on low risk (of course that means low yield). Happy to see that my Arizona A and B funds have the highest percentage of AA and AAA munis. All of them are between 60% and 71%, which is decent.
Alliance Bernstein has other municipal fund categories that cover other states such as California. I told my investment advisor to keep the Arizona funds, the red it risk of California is worse. I intend to be a California resident for no more than five years.
I also love two year notes from the U.S. government. Of course states don’t print money, so U.S. short term notes are important.
The approach is to reinvest equal amounts of money in two year notes so you have essentially a flow of money every month.
You can still get paper savings bonds in your federal tax refund. I recommend it.
Cash is king until cash no longer is king, which is why you should buy fractional gold and platinum bullion regularly. Watch the one year treasuries 52 week t bills) with the PoG.one year treasuries made a sudden move upward not seen in the last five years.
PRESS EXAMINER
GOING FURTHER
World News
CHINA SYNDROME: Will Beijing’s ailing economy drag us all down?
By Mo Ahmad -
August 21, 2015
In the U.S., the selling started early and never let up. It was the worst in several years. The Standard & Poor’s 500 index was on track for its worst week since 2011.
In emerging market currencies, the Turkish lira briefly touched 3.0 per dollar as political uncertainty and conflict focused in the country s southeast undermined investor sentiment.
Following last week’s decision by the country’s monetary authorities to reduce the value of the yuan, China’s currency, stock markets have really taken a hit. Tsipras is hoping to capitalize on his personal popularity in the election as he seeks a new mandate to govern.
The Dow fell 530 points on Friday to cement a 10-per-cent decline since early March.
In Asia, the Shanghai Composite index suffered another steep drop of 4.3 percent.
“The appearance of China weakening its exchange rate to boost growth has added urgency for policymakers elsewhere to do what they can to grab more export revenue” said Koon Chow, of Union Bancaire Privée.
The FTSEuroFirst index of 300 leading European shares fell 1.3 percent and Germany s DAX fell 1.2 percent to its lowest since January, putting it down about 6.7 percent so far this month.
But there was really nowhere left for them to go: The world has officially run out of places for equity investors to find refuge. China’s market benchmark fell 6.1 percent on Tuesday and closed up Wednesday only after what analysts suggested might have been heavy buying by a state company charged with shorting (SIC) up prices.
The current turbulence is chillingly reminiscent of the Asian crisis of the summer of 1998.
In the minutes, Fed officials appeared to move closer to raising interest rates for the first time in almost a decade but remained concerned that the economic slowdown in China could pose risks to the U.S. economy. Most emerging markets are not that cheap.
Before this week, U.S. equities had held their ground throughout 2015, weathering turmoil from Greece and headwinds including a strong dollar that threatened multinationals’ earnings and a more than 60 percent drop in oil prices.
Wild currency market swings are playing out around the globe. “And this something has to translate into a weaker U.S. dollar”.
Since that Fed meeting, the global economy has proven itself much more fragile than most observers had predicted. “Investors are scared and confused, and if you are an emerging market equity investor, probably close to suicidal”.
…
More positive economic news.. Falling prices to dramatically lower and more affordable levels.
Update: Crude Crashes Through $40 Floor
http://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic
Hit the 5Y button below the chart for a clearer view of where prices are headed and how quickly they are moving.
Hey, it’s starting to look like my $30 isn’t so crazy after all!
Actually, full-disclosure: my entry is probably a little higher than that.
Where is AlbqDan when we need someone to convince us that $80/bbl oil by December 2015 is still a possibility?
I’ll step up to make that case. With the 1400-year-old Sunni-Shia conflict reigniting, the influence of ISIL spreading, and Saudi Arabia and Iran waging a proxy war in Yemen, it’s not hard to picture a scenario where Mid-East oil production is disrupted, causing prices to soar. In addition, Yelen is almost certainly going to panic and launch a new counterfeiting binge (QE4) in September, further debasing the currency and ultimately feeding hyperinflation.
Oil rig count climbs for 5th straight week
Akin Oyedele
Aug. 21, 2015, 1:02 PM
The oil rig count climbed again this week, according to driller Baker Hughes.
Producers brought 2 oil rigs online, taking the total count to 674. The gas rig count was unchanged at 211.
Last week, oil rigs climbed for a fourth straight week, also by 2.
Shortly after the release, West Texas Intermediate crude fell below $40 per barrel for the first time since 2009.
With oil under $40 per barrel, markets remain sensitive to any signals that the supply glut is worsening.
…
I might get my $67 buy on Chevron in a couple weeks the way things are going.
Bronx County, NY Housing Prices Fall 6% YoY; Declines Spread
http://www.zillow.com/bronx-county-ny/home-values/
Any buys?
Try mlpa
If you got it, dump it. Commodities are radioactive.
Better yet….. Liquidate and get rid of every bit of debt you’ve got. You’ll thank me later.
I need reassurance that China’s economy will keep growing at least 7%/year…
^ Oops, this was supposed to post down lower, lol
Moneybox
A blog about business and economics.
Aug. 21 2015 5:46 PM
The Stock Market Just Fell Off a Cliff
By Alison Griswold
Yes, that cliff.
Friday’s stock market tumble could only be described as a rout. The S&P 500 plunged 64 points or 3.19 percent. The Dow Jones Industrial Average slid 531 points or 3.12 percent. And the Nasdaq toppled 171 points or 3.52 percent. That built off downward momentum from Thursday, when the three major indices each fell by more than 2 percent. Altogether, it was the worst week for U.S. stocks since 2011. What’s the deal? As with most sudden disturbances in the stock market, it’s hard to know for sure, but there are a bunch of things that could be worrying investors right now.
First, China. The global economy has shuddered recently on a string of troubling economic updates from the Middle Kingdom. Last week, after two decades of keeping a firm grip on the currency, China’s central bank allowed the yuan to fall a striking 4.4 percent. The move was widely interpreted as a bid to prop up exports, which plummeted a significantly worse-than-expected 8.3 percent in July—the biggest drop in four months. The yuan stabilized this week as the People’s Bank of China resumed setting the daily reference rate in a tight band, but the bad news kept coming. On Friday, U.S. markets awoke to data showing China’s factory sector shrank faster than it had in six years in August, with decreases in both domestic and export demand. While China’s official figures have touted 7 percent growth, the great investor fear is that the country’s economy is actually growing much more slowly—and in some provinces and regions perhaps even slipping into outright recession.
…
Come back, Dan! All is forgiven.
You have to admire his self discipline in ignoring so many alluring posts on China, oil and global warming!
His cardboard box doesn’t have wi-fi.
Come back, Dan! All is forgiven.
Why? So you can taunt him that he was wrong?
lol@Lola
Apparently the absence of his posts is no barrier to taunting him.
Why? So you can taunt him that he was wrong?
Of course!
I heard that thursday and friday was the first time the DowJones lost triple digits on consecutive days and closed on the low both days.
Given the amount of money sloshing around out there I expect a thousand point up/down day this week.
I find that hard to believe. But even if it were true, 100 points today is not 100 points circa 1987. I doubt that the percentage declines Thursday and Friday are anything historical.
I went to the dentist yesterday.
I wore a ratty old pair of sneakers, a ripped pair of shorts and a T-Shirt with a big stain on it.
http://www.youtube.com/watch?v=zUdcWv34Oww - 157k -
I have a decent savings that I can put somewhere and forget for next few yrs. How do the Canadian Energy Trusts look to you? They are cheaper than they have ever been. I made some money on those 2009 - 2012 period. Tempted again, but not sure where oil is going 4 to 5 years from now.
how about MLPA
Not sure.
how about Arch Coal
Wow! Obama drives down coal company stocks, and Soros buys them on the cheap
By Thomas Lifson
August 18, 2015
I have always believed that global warming is a gigantic scam, driven by greed and lust for power. Now comes the shocking news, via Steve Milloy writing on Breitbart, that following President Obama’s use of CO2 emissions as a weapon to drive major coal companies near bankruptcy, the ultimate politically connected speculator George Soros is buying up stock in major coal producers on the cheap.
I predicted in this column last week that the left wasn’t going to kill off the coal industry so much as it was going to steal it. That prediction is already becoming true courtesy of billionaire George Soros.
U.S. Securities and Exchange Act filings indicate that Soros has purchased an initial 1 million shares of Peabody Energy and 553,200 shares of Arch Coal, the two largest publicly traded U.S. coal companies. As pointed out last week, both companies have been driven perilously close to bankruptcy by the combination of President Obama’s “war on coal” and inexpensive natural gas brought on by the hydrofracturing revolution.
Under the hypothesis that not even socialists would leave trillions of dollars worth of a perfectly safe and clean energy source in the ground for the sake of the imaginary “climate crisis,” I posited that once the existing coal industry ownership was wiped out by President Obama’s regulatory onslaught, a new politically correct ownership would rehabilitate the fuel by contributing to Democrats.
Enter George Soros, a hardball investor and philanthropist to myriad left-wing causes, including the activist and “clean energy” rent-seeking movements that have helped take down the coal industry. In 2009, for example, Soros announced he would spend $1 billion in “clean energy” technology and create a San Francisco-based advocacy organization called the Climate Policy Initiative.
Less than a year ago the Soros’ Climate Policy Initiative issued a major report concluding that the world could save $1.8 trillion over the next two decades by transitioning away from coal. The report referred to coal reserves as “stranded assets” that were losing value as they were no longer needed.
For now, Soros’s investments are small scale (by his standards), but the reports end with June, so there is no knowing what subsequent investments have been made. These companies own huge reserves of coal that would be worth far more if the jihad against coal ended. If, for instance, the EPA backs away from its latest rules on CO2 emissions.
Read more: http://www.americanthinker.com/blog/2015/08/wow_obama_drives_down_coal_company_stocks_and_soros_buys_them_on_the_cheap.html#ixzz3jXzGQ6D2
I thought the gold tooth yanker was out to save the world?
Obama was a Soros pet project back in ‘08. The oligarchs who backed Obama are making out like bandits; the rubes who fell for hope ‘n change, not so much.
“The oligarchs who backed Obama are making out like bandits; the rubes who fell for hope ‘n change, not so much.”
Riviera Beach City Council votes to approve change from Old Dixie Hwy to President Barack Obama Hwy
Monica Magalhaes, Michelle Quesada
9:33 PM, Aug 19, 2015
One Riviera Beach woman who chose to conceal her identity said she’s lived in Riviera Beach since the 60s and says the history doesn’t bother her.
She’s all for naming a street after President Barack Obama, just not in the proposed area.
‘What we do we have to show for Barack Obama on Old Dixie?” she questioned.
Her concern was echoed by Chair Dawn Pardo and two other residents who spoke and said the area is full of blight.
“It makes you want to cry because it could be better than what is it,” said one resident who spoke publicly.
Mayor Masters stepped in, making a commitment to clean up the area. Four out of five council members voted yes to naming the highway President Barack Obama Highway. Still, some question the mayor’s focus on this project.
“What do you say to people who said maybe we should be fixing crime issues within the community instead of changing a street name?” we asked the Mayor.
http://www.wptv.com/…ty-council-votes-to-change-old-dixie-highway-to-barack-obama-highway - 387k -
Obama Highways are going to be the next MLK Boulevards. This is not a compliment.
“Obama Highways are going to be the next MLK Boulevards.”
“I don’t care where you are in America, if you’re on Martin Luther King Blvd there’s some violence going down.”
Chris Rock MLK Blvd - YouTube
http://www.youtube.com/watch?v=7hJxWr1TKK8 - 187k -
^ Yeah, exactly what I was thinking. Visit your nearest MLK Blvd for proof.
“This is not a compliment.”
No, but it sure is a public service.
So Obama is waging a war on coal so George Soros can buy coal on the cheap. This is similar to ADan’s theory about Obama driving down the price of oil to punish Putin. The spirit of ADan lives!
Obama did wage war on coal and George Soros did buy coal on the cheap.
PS
The Keystone Pipeline didn’t get built and guess who profited?
Obama Puppetmaster Warren Buffett Biggest Winner From
Keystone Pipeline Rejection
Submitted by Tyler Durden on 01/24/2012 09:36 -0400
Just when one thinks American crony capitalism couldn’t hit new lows, here comes Warren Buffett and his personal puppet, the president, proving everyone wrong once more. Because if one thinks there is no (s)quid pro quo for all that “sage” advice that Buffett has been giving to Obama on extracting as much wealth as possible from future wealthy Americans (before they decide they have had enough with this crony shit and leave the country for good), one would be fatally wrong. As it turns out, it is not just natural resources and aquifer purity that Obama had in mind when sealing the fate of the Keystone XL pipeline. No - it appears there were far more relevant numerial metrics that determined Obama’s decisions. Such as the bottom line number of Buffett’s Burlington Northern, which according to Bloomberg, is among U.S. and Canadian railroads that stand to benefit from the Obama administration’s decision to reject TransCanada Corp.’s Keystone XL oil pipeline permit. ‘“Whatever people bring to us, we’re ready to haul,” Krista York-Wooley, a spokeswoman for Burlington Northern, a unit of Buffett’s Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A), said in an interview. If Keystone XL “doesn’t happen, we’re here to haul.” And quite delighted to reap the windfalls of unfounded populist fears she forgot to add. Because while the whole “carbon-credit” multi-trillion top line expansion scheme for Goldman under the pretense of actually caring for the environment may have collapsed, it is not preventing others from trying and succeeding where even Goldman has failed.
From Bloomberg:
Rail car production is already at a three-year high as manufacturers such as Greenbrier Cos Inc. (GBX) and American Railcar Industries Inc. (ARII) expand to meet demand for sand used in oil and gas exploration, according to Steve Barger, an analyst at Keybanc Capital Markets Inc. in Cleveland, citing Railway Supply Institute statistics.
Rail-car suppliers can add capacity, Hatch said.
“Railroads are not just a stopgap while we wait for a pipeline,” Hatch said in an interview. “They are potentially part of the long-term solution.”
Pipelines ,ngas toll roads
All those are going lower. Much much lower.
Hang onto your cash. You’ll thank me later.
The herd is getting spooked.
http://www.alt-market.com/articles/2674-economic-crisis-goes-mainstream-what-happens-next
One downside of the energy trusts is the form K for partnerships. I do my own taxes and went through this for a few years with Pengrowth.
The Federal Reserve is not your friend.
http://www.theburningplatform.com/2015/08/21/the-federal-reserve-is-not-your-friend/
Does the burning platform really have rights to this, or does it just repost material from other sites without attribution?
I read this originally on reason.com: http://reason.com/archives/2015/08/20/the-federal-reserve-is-not-your-friend
Big “oops” at Bloomberg leads to exit of editor. Meanwhile, morale among the editorial staff at this oligopoly mouthpiece is described as “extremely low” as more staff cuts are coming. Bloomberg ended their “comments” feature as they were getting blasted by readers for their corporate statist propaganda line. Now it looks like subscribers are voting with their cancelation. Good riddance. Pravda went through something similar when the Soviet public got fed up with lies and dissembling while the system collapsed all around them.
I only look at the index futures on Bloomberg. Used to read the comments on articles. They were more entertaining.
Same here. The comments were far more informative than the articles themselves. Bet Bloomberg’s eyeball totals dropped precipitiously once they disabled the comment sections. Now I consciously avoid the site except for the futures.
The informative comments might be way they disabled them. Who wants to read an author when the commenters promptly show the stupidity or hidden agenda of the author.
Ya think? They were getting called out left and right…hijacking the Oligopoly’s approved memes, which must’ve infuriated the editors and their bankster puppeteers.
Exactly. When the readers are too smart for the manipulative writers, the comments get chopped. That irked me when they got rid of the comments. Perhaps because they were mostly libertarian.
http://www.marketwatch.com/story/top-bloomberg-editor-exits-after-federal-reserve-data-flub-2015-08-21?link=MW_latest_news
Maybe they should consider a policy of releasing data to ALL parties at the same time, rather than giving early access to media and insiders?
It could be as simple as actually posting the press release on their own website at 2pm, rather than an early issue with an embargo.
Nah, that would never happen—there is too much money to be made from insiders having early access to information.
I thought insider trading was illegal?
Not if you are in the government, or quasi-governmental institutions like the Fed; did you follow the story on the widespread issuing of waivers for conflict-of-interest during the downturn?
Fed insiders were definitely explicitly allowed and encouraged to profit from their insider information.
Translation: rules like insider trading only apply to the plebs.
I thought insider trading was illegal?
Our oligarchs and their enablers are literally above the law.
Free Jon Corzine!
How much hillarious charge for secure wiping emails? I could use some help.
Shrub, Omaba, Hillay, et al doing wonders to nixon’s reputation.
And Trump is bringing back Nixon’s “Silent Majority” at least according to the Washington Post.
Oh, do they hate him or what?
I know a few people that are “scrappers” They gather any and all scrap metal ,and they are getting very little for their efforts right now…It gets in their blood ,like yard saleing or buying Rental houses….The chinese have almost quit buying now ,a bad sign all around. One of them showed me a ticket yesterday he had gathered and sold 900 lbs of it ,and got just a bit over $40..Now that is working for the crumbs..
the price of like #1 steel was over 200 when the chinese were hot and heavy into buying. now Its like 60-80 / ton.
Tin is pretty weak too.Stuff like car bodies is just real low.
My siblings and I ran into a few of those guys last winter when getting my parent’s home ready to sell, 4 miles east of downtown Ferguson. We had a garage full of trash ready to haul off and one of my sisters had scheduled a trash hauler to come by to do the job.
The trash hauler didn’t show up on time, and about a half hour after he was scheduled to arrive, some guy we had never seen before stopped his flatbed truck in front of our place and came over to strike up a conversation. He asked my sister if she minded whether he looked through the junk pile we had cleaned out of my parent’s home. After looking through it, he kindly offered to take some of the trash away “for free.” My sister gladly consented, and within about five minutes of time, the guy had loaded every trash item containing an ounce or more of metal onto his truck and drove off.
Another half hour later, our contracted trash haulers finally showed up. A heated conversation between the proprietor and his assistant ensued in which one of them exclaimed, loudly enough for me to overhear, “Someone already took away all of the metal!”
I felt tempted to remind them of the old saying, “If you snooze, you lose,” but I held my tongue, as the trash haulers were people of color operating in an area where white lives don’t matter, and I figured they probably were packing heat.
Oligopoly financial media trying desperately to spin the market meltdown as positive. Knife catchers beware - the Fed is out of ammo and the Ponzi markets look set to crash hard.
http://www.marketwatch.com/story/signs-of-panic-like-selling-could-be-a-short-term-positive-for-the-dow-industrials-2015-08-21
Was China’s Yuan devaluation somehow timed to preemptively tank the market and ensure the Fed didn’t raise rates?
China, no china fed would not have raised rates.
But now I think it is super obvious to everyone and long before September. No more bullets in Fed gun except QE4. Would QE4 help China?
‘nother exprosion in China. Dang!
http://www.zerohedge.com/news/2015-08-22/second-chemical-warehouse-explosion-reported-china
Their financial economy is imploding at the same point when their real economy is (literally) exploding!
Chinese bagholders have a way of running amok to make their point. Wonder how many “industrial accidents” are due to disgruntled workers.
Chinese fire drill.
You never know what a disgruntled Chinese investor will do on discovering he lost his life’s savings by gambling in the stock market. Suicide is apparently an option for some.
Caixin online
07.27.2015 19:17
Investor Angry at Gov’t Role in Stock Market Rout in Apparent Suicide (updated)
Liu Qiang suffered from depression and was angry about government intervention in crash, say people who knew him
By staff reporters Jiang Fei, Zhang Yu and Liu Caiping and intern reporter Yang Qiaolin
(Beijing) – A fund manager who apparently jumped to his death from a high-rise in downtown Beijing suffered depression and was angry the government intervened in the stock market rout, people who knew him say.
Liu Qiang, a 36-year-old fund manager at Ruilin Jiachi, an asset management firm, jumped to his death from a building near busy Jianguomen Street, people who knew him well said.
News about his death surfaced on July 24, when a post that he jumped off a building two days earlier appeared on the social media accounts of investors and people working in finance. It is unclear who posted the first message.
On July 27, a lawyer from Beijing Bailun Law Firm issued a statement on behalf of Liu’s relatives that said Liu actually died on July 21. The death was due to “personal reasons” that had nothing to do with the fund he managed and the recent stock market fluctuations, the statement said.
Several people close to Liu said he suffered from depression and returned to work in April after spending three years in the southwestern province of Yunnan where he was seeking treatment for depression. “He has had a very tough time in recent years,” one of Liu’s friends said.
Some of Liu’s friends said he had been very frustrated by the government’s efforts to support the bourse amid recent turmoil because he believed this upset market order. He thought that “the rules and order of the market had been broken … and was desperate, feeling that he was at his wit’s end,” one of his friends said.
In a blog dated July 7, Liu wrote: “The stock market disaster has turned many of my investment principles upside down … and made me doubt many times whether I’m still suitable for the market.”
…
China, China Business & Economy
After Crash, Chinese Woman Who Bought Stock on Advice of Hairstylist Pauses to Reflect
By Jenny Li, Epoch Times | August 10, 2015
Last Updated: August 11, 2015 10:05 pm
Investors check a screen displaying share prices at a security firm in Shanghai on July 6, 2015.
(STR/AFP/Getty Images)
Recent gyrations in China’s stock market have caused anger, fear, and in some quarters, deep reflection. The personal experience of one young woman—she blogged under the moniker “Little Green Mulberry”—caught the attention of internet users recently. She wrote about how she got into speculating in stocks, allured by the promise of quick gains, then how she suffered badly in the markets, before coming to the realization that trying to get rich quick is a fool’s game.
An abridged translation of her account follows.
While on holiday abroad in 2011, I noticed several middle aged men in my tour group monitoring stocks on their cell phones. With furrowed brows, they traded bad experiences playing the markets.
They are not even enjoying their holiday, I thought scornfully. What’s so great about stocks?
My thinking started to change during a trip to the hairdresser’s in February.
“The stocks are going up; which one did you get?” my hairstylist asked in a discreet manner. I drew a blank.
“You’re an educated person,” he said mockingly. “How can you not be interested in the bull market?”
I returned the following month to find my hairstylist cursing himself for not investing in Internet television company Letv’s stock. “It’s rising 10 percent everyday,” he lamented.
How much did you invest? I asked. 50,000 yuan, he replied. And how much have you made? Not much, only 20,000 yuan, he said. That’s not bad, I thought.
After a restless evening and a chat with a friend who profited from trading, I decided to start investing. The next day, I opened a trading account with a securities company while surrounded by uncles and aunties shouting “up” or “down.”
I won’t be like them, I thought. I will calmly and rationally face the fluctuating markets.
I downloaded the stock trading software, picked up stock market terms and China’s trading initiatives, and started to pay more attention to these words when they appeared in the finance pages of newspapers.
The Letv stock my hairstylist mentioned was still doing well, making over 5 percent daily. Trusting my financial acumen and feeling confident that I would be a capable trader in the future, I rushed in to invest. A friend warned me of the dangers of joining the stock bubble, but I told him angrily: “I’d rather lose money than opportunity.”
Since then, the fate of the Letv stocks consumed me. It became routine for me to be seated in front of a computer at 9 o’clock sharp to monitor the stock markets. I worried about stocks all day, constantly checking stock updates on my cell phone, and feeling anxious at the slightest change. Several times I left the gym for home early because I got angry that my stocks were falling.
…
Cmon Liu, it’s only money. Are you a materialist Chinese?
I know a few materialist Chinese.
Dated a girl from Hong Kong. It was 2006. She had $500,000 to invest and asked my advice. She was biased toward real estate. I advised her to stay out and advised her to do T bills and precious metals. I never felt guilty of dumping her for that reason. Every time we met it was “6,” which was great, but also we had to go shopping and I had to buy her gifts. She also liked to show me off as white boyfriends are status symbols for Chinese girls in L.A. (at least in ‘06). She had a $1500 per month 2 bedroom apartment in Culver City, which was okay. My investment advice was to try to find a way to make the $500k cover her rent. She drove a BMW 3 series, better than my car. One of her Chinese friends had a Jewish dermatologist making $50k per month. Lived in Beverly Hills. I was at his house once. A nice setup. Another girlfriend of hers had a prof at UCLA as a boyfriend. She had a $900,000 loft in Marina Del Rey, a large house in nearby Weatchester, a BMW, and another car. I was the poorest white boy of the bunch, but the youngest and best looking.
Oligopoly financial media trying desperately to spin the market meltdown as positive.
Isn’t is a positive when mis-pricing is removed from the system? I think it is.
(Hint: everything was mis-priced intentionally by the Fed…)
Foreign not-so-smart money fleeing to the illusory “safety” of the US housing bubble. Meanwhile, precious metals look set to soar.
http://wolfstreet.com/2015/08/21/foreign-smart-money-sees-us-housing-as-global-safe-haven-pours-into-trophy-cities-drives-up-prices/
Don’t buy it. They all told us that everyone wants to live there.
When we go to war with China in another couple of years, how much do you want to bet all those Chinese embezzlers who bought up west coast properties get herded off to internment camps a la WWII Japanese-Americans (Constitution? We don’t need no stinkin’ Constitution) and their properties get expropriated.
Very interesting. Just today the Az Republic reported a positive RE article on Phoenix. And now I see the commie Chinese weird food eaters are part of the reason Phoenix RE is “always” going up!
Coffee is for closers, work is for losers.
–Ancient Chinese Proverb
https://www.youtube.com/watch?v=8kZg_ALxEz0
Undocumented immigrant who works for Trump speaks out:
https://www.youtube.com/watch?v=e-r9E5n5FnM
Dude’s got some cojones to speak up; he’s probably unemployed by now. Hmm, wonder how many more illegals Trump has on payroll? Trump has said he wants to enforce E-Verify. Maybe the hypocrite should start with his own staff.
Yawn, guy’s got work authorization.
Another Vargas Boi. I liked the Vargas Girls better.
If Trump stays in his own hotels he’d better be careful about eating or drinking what room service brings…
The worr harr thing is really starting to wear a bit thin.
Not exactly undocumented if he has a Daca authorization and an employment authorization. Those seem like documents to me.
SJW agenda-pushing is so important that it justifies the pathological lies.
http://www.breitbart.com/big-government/2015/08/20/shaun-king-confession-i-have-no-idea-who-my-father-is/
He has no idea who his father is and he’s saying that makes him black?
That’s racis’.
Taxpayers, get ready to ante up for the seven million ‘Muricans who have stopped making any payments on their student loans. Because, as Obama and Hillary have told us, it’s the right thing to do.
http://www.zerohedge.com/news/2015-08-22/7-million-people-havent-made-single-student-loan-payment-least-year
I wonder what the total number of people with student loans is?
The total debt is $1.3T and rising fast. Bankster puppets like Hillary can’t wait to offload that onto taxpayers.
Google says 40 million have such debt. So more than 1 in 6 hasn’t paid for a year? Ahahahahahahaha. Collapse is soon.
Scam after scam.
Isn’t bigger government great?
———-
Education Secretary Arne Duncan said declines [in some categories of delinquencies] resulted from rising participation in income-based repayment plans, which lower borrowers’ monthly bills by tying payments to their incomes. Enrollment in the plans surged 56% over the past year among direct-loan borrowers.
The administration has urgently promoted the plans, mainly through emails to borrowers, over the past two years in an effort to stem defaults. The plans set payments as 10% or 15% of their discretionary income, defined as adjusted gross income minus 150% the federal poverty level.
The plans carry risks, though, for both borrowers and the government. Many borrowers’ payments aren’t enough to cover the interest on their debt, allowing their balances to grow and threatening to trap them under debt for years.
At the same time, the government could be left forgiving huge amounts of debt if borrowers stay in the plans. The government forgives balances after 10, 20 or 25 years of on-time payments, depending on the plan.
Nufin from nufin means nufin - Billy Preston
Sounds like more like a lifetime of slavery at the 150% poverty level.
“Nufin from nufin…” Problem is that Billy Preston was English with African ancestry. Those people don’t talk American ghetto.
The students are just following Trump’s example. After all, Trump said he’s had 4 bankruptcies and that defaulting is a legitimate tool that most successful businesses use. What’s good for the goose…
I agree. So let’s allow student debt to be legally discharged in bankruptcy…
Oh wait - we can’t. It is currently against the law.
And further - this debt is guaranteed by the government.
No wonder why colleges lend $100,000 to students and have building 5 star dorm complexes…
Isn’t bigger and bigger government grand?
It gives us affordable health care, affordable housing and affordable higher education.
And Hillary! wants to make education “free”
The students are just following Trump’s example. After all, Trump said he’s had 4 bankruptcies and that defaulting is a legitimate tool that most successful businesses use. What’s good for the goose…
WPA=Hillary
One of Hillary’s minions, for sure. Can’t wait till we tree the last of them with Bloodhounds….
Europe being inundated by refugees from the neo-cons’ “regime change” failed states.
http://news.yahoo.com/refugee-crowds-build-macedonia-border-night-spent-open-073620518.html
How about grappling iron babies or foothold babies.
Maybe mooring babies?
“But appearing on Bill Bennett’s radio show, Bush set off Democrats by calling for more enforcement and using the term “anchor babies.”
Jeb Bush calls for crackdown on ‘anchor babies’
Alex Leary, Times Washington Bureau Chief
Wednesday, August 19, 2015 7:44pm
Jeb Bush said Wednesday he disagrees with Donald Trump’s call to end birthright citizenship but echoed Marco Rubio’s call a day earlier to prevent abuses, which Bush described with a loaded term.
But appearing on Bill Bennett’s radio show, Bush set off Democrats by calling for more enforcement and using the term “anchor babies.”
“If there’s abuse, if people are bringing — pregnant women are coming in to have babies simply because they can do it, then there ought to be greater enforcement. That’s (the) legitimate side of this. Better enforcement so that you don’t have these, you know, ‘anchor babies’, as they’re described, coming into the country.”
Hillary Clinton replied with a tweet: “They’re called babies.”
http://www.tampabay.com/…/jeb-bush-calls-for-crackdown-on-anchor-babies/2241994 - 88k -
What do you do on the news that one of your teenage nieces ran off with a guy and is living with him in a trailer park in the Sacramento area? (Perhaps they are renting one of JingleMale’s investment properties?)
My first inclination: Do nothing.
My guess is: she will be back soon, so leave the light on for her.
Luckily she is my niece, not my daughter! (That said, it isn’t out of the question for her to show up on our doorstep…)
She can’t be living there Jingle Fraud lives in all of his investment properties, at least according to his loan apps.
LOLZ
PB, let me know if you need anything. I can be there for you and for your niece. There is no substitution for boots on the ground. JM
Are the Chinese government’s efforts to prop up its stock market working?
Asia & Pacific
As Shanghai plunges again, another stock market shows where China’s torment starts
A golden bull sculpture stands in front of a screen showing share prices at the Shenzhen Stock Exchange in 2011.
(Wu huijun/Wu huijun - Imaginechina)
By Emily Rauhala August 21
SHENZHEN, China — Not one, or two, but three bulls stand sentinel outside the Shenzhen Stock Exchange, symbols of a city, and a country, that have spent more than three decades charging up, and up, and up.
This spring they stood watch as the market went on yet another epic tear, a frenzy of borrowing and buying that saw Chinese stocks rush to ridiculous heights, attracting millions of new investors along the way.
By summer, the bubble had burst, sending share prices plunging and wiping trillions from the books. Spooked, Chinese authorities resorted to extraordinary measures: Trading was suspended in half the shares in the market, big investors were ordered not to sell, state funds were told to buy shares, and officials threatened criminal charges for “malicious” short-sellers.
It worked, sort of — for a few weeks.
Now volatility has returned. Chinese stocks dropped again Friday, with the benchmark index dropping more than 4 percent. The Shanghai Composite ended the week down 11.54 percent and the Shenzhen Composite down 11.73 percent, making this the worst week since the summer sell-off — despite the government’s ongoing efforts to stop the slide.
…
Markets Asia Stocks
WSJ PRO
China Offers Investors a Glimpse of Stock Market Rescue
New government holdings support big banks and other financial firms
An investor looks through stock information at a trading hall in Haikou, China on July 2. Investors got a fresh glimpse of the extent of China’s efforts to rescue the market, with disclosure of substantial new government holdings Wednesday.
Photo: Zhao Yingquan/Zuma Press
Updated Aug. 19, 2015 1:10 p.m. ET
BEIJING—China gave investors a fresh glimpse of the extent of its efforts to rescue a slumping stock market in recent weeks, as it disclosed substantial new government holdings in key state banks and other financial firms.
Central Huijin, an investment arm of China’s sovereign-wealth fund, increased its holding in three big state-run banks, one midsize bank and an insurer as part of the market rescue effort, according to filings with the Shanghai and Hong Kong stock exchanges. That effort, which included a number of government agencies together called Team China, was intended to stop a market slide that has knocked the Shanghai stock market’s main index down more than a quarter from its June high.
Industrial & Commercial Bank of China, Agricultural Bank of China and Bank of China—as well as China Everbright Bank and New China Life Insurance Co. —all said they had been notified of share transfers that had increased the number of shares held by Central Huijin. It wasn’t clear when the purchases were made.
None of the firms specified which agency had transferred the shares to Central Huijin. It is likely to have been China Securities Finance Corp., a government-backed margin-financing company that moved to prop up the slumping stock market in July.
On Friday, China’s securities regulator said that China Securities Finance Corp. had recently transferred some of the stock it purchased to Central Huijin, which had already been a major shareholder in China’s biggest state banks.
ICBC, China’s biggest lender by assets, said Central Huijin increased its stake in the bank by 1.01 billion shares, bringing its holding to 35% of the lender’s total stock. Agricultural Bank of China Ltd. and Bank of China Ltd., the No.3 and No.4 banks, said Central Huijin added 1.26 billion shares and 1.8 billion shares respectively, bringing their stakes to more than 40% and nearly 65% of the lenders’ total shares.
The stake increases are relatively small given Central Huijin’s already-substantial holdings. Its stake in ICBC’s mainland-traded A shares totaled 46.3% after the increase, compared with 45.9% as of May 26.
Share prices started sliding in June following a steep run-up over the previous year. Stock prices on Shanghai’s main board tumbled around 30% from this year’s peak before the massive government rescue—hastily put together in July—helped stem the losses.
As part of the rescue effort, China directed some state agencies to buy shares and others not to sell. It also put a halt to new stock offers and relaxed rules on margin trading, a key form of financing for stock purchases, and launched a police probe of what it called “malicious selling.”
…
What are the implications of a heavily-indebted Chinese government using borrowed money to prop up the stock market, only to see Chinese stock prices continue to slide?
Too bad for the Chinese stock market rescue tsar that he didn’t have time to read the many warnings of incipient stock market collapse that have been posted here for over a year already.
Aug 3 2015 at 10:01 AM
Updated Aug 3 2015 at 3:44 PM
Meet China’s stock rescue chief: he never saw the crisis coming
The agency’s unique mandate is to intervene in the market to buy stocks, with money borrowed from the central bank and other sources, in order to help prop up share prices.
Bloomberg
by Jun Luo
After China’s stocks crashed in June, the government put more than $US400 billion at the disposal of a little-known state agency, the China Securities Finance Corporation, headed by an academic and bureaucrat named Nie Qingping. It was told to save the market.
The agency’s unique mandate is to intervene in the market to buy stocks, with money borrowed from the central bank and other sources, in order to help prop up share prices. With the recent volatility evidenced by another crash on July 27, its success so far isn’t readily apparent.
Nie, the 53-year-old chairman, hasn’t given interviews on his emergency role, and the government hasn’t spelled out exactly what discretion Nie and his agency have when executing orders from above. Four weeks into the new role, the picture emerging from Nie’s published books and commentaries, as well as interviews with fellow academics, is of a professor with 25 years of experience watching stock manias – who still got blindsided by China’s latest crisis.
“The latest rally has the characteristics of a structural bull market,” Nie wrote in an article in March, joining a chorus of officials and state-media commentators talking up the market’s prospects. As one of the architects of China’s move to allow margin financing, in which people borrow money to buy stocks, Nie played down concerns that debt-funded stock purchases were rising too quickly.
Now, Nie faces a “Herculean task” as head of an agency that never expected to be handed the role of market saviour, according to Liu Yuhui, a Beijing economist and a researcher at the Chinese Academy of Social Sciences.
China Securities Finance was set up in 2011 to provide liquidity for brokerages offering margin financing. Housed on the 15th floor of a building in Beijing’s financial district, in an office where water trickles over traditional Chinese rock sculptures, Nie and his 70-odd staff got access to between 2.5 trillion yuan and 3 trillion yuan ($US403 billion to $US483 billion) for the rescue, according to people familiar with the matter.
“The role of stock bailout most certainly wasn’t their mandate when they started China Securities Finance,” said Fraser Howie, a co-author of Red Capitalism, a book on China’s financial system. “It was set up to do one job, and clearly has been co-opted or coerced – you can choose your verb – to go and do another job.”
The money on tap is in the form of credit from commercial lenders and from the People’s Bank of China, which has its headquarters about a mile away, as well as from the proceeds of bond sales. It’s designated for buying shares and mutual funds, as well as the agency’s usual role of liquidity for margin finance.
Since China Securities Finance started buying on July 6, a measure of volatility in stocks has surged to nearly a 20-year high. On July 27, the Shanghai Composite Index plunged 8.5 per cent, the most since February 2007, as investors feared that the government was pulling back from its rescue efforts.
Details of how China Securities Finance now operates, how much liquidity remains at its disposal, and how it chooses which stocks and mutual funds to buy haven’t been released officially. Neither Nie nor the agency responded to requests for comment.
The agency first bought blue-chip companies before also targeting mid- and smaller-sized companies on July 8, according to statements by the China Securities Regulatory Commission, which oversees the agency.
“Its opacity has already led to extreme volatility and confusion in the stock market,” said CASS’s Liu, who also works for brokerage GF Securities Co. “Investors deserve to know more about it.”
…
The words of a favorite nursery rhyme come to mind:
Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
All the king’s horses and all the king’s men
Couldn’t put Humpty together again.
If I were a member of the Chinese Communist party, I would immediately shut down all noose factories.
Are your bitcoin investments forked?
They are investments? LOLZ.
gold bullion is an investment?
LOLZ
Went to a fabulous airshow today. WWII and Korean Vets were there. Very nice meeting these brave souls, and what great storytelling.
Met some wanting to retire Engineers (all varieties) that wish they weren’t in the stock market yesterday. They all were stock profits to pay off their homes betting. We did the right thing. No debt is cool.
Save it mafia.
“No debt is cool. ”
All debt is dumb. Debt is for statists.
Debt is slavery. Keep stacking, Brother SH.
Using a lifetime of earnings to pay double or triple for a depreciating asset then throwing more money at is the right thing eh?
You’re screwed.
mafia -write some new arguments, sweetie pie.
write some new misconceptions and maybe he will.