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The Shanghai composite fell 4.3% and the Nikkei dropped 1.4% Tuesday. A sharp revision to the...

The Shanghai composite fell 4.3% and the Nikkei dropped 1.4% Tuesday. A sharp revision to the Conference Board's China Leading Indicators (to +0.3% from +1.7%), due to a calculation error, seems to have spooked markets. U.S. stock futures are down sharply, with S&P -1.3% to 1057, and 10-year Tsy +0.4% to 122-20.
Comments (6)
  • nobby73
    , contributor
    Comments (1177) | Send Message
    A calculation error? You mean they didn't clear the number with Bernanke first?


    QE2 here we come...
    29 Jun 2010, 04:42 AM Reply Like
  • bbro
    , contributor
    Comments (9319) | Send Message
    Total floor space....
    29 Jun 2010, 05:57 AM Reply Like
  • Papaswamp
    , contributor
    Comments (2178) | Send Message
    local chinese govts run a huge ponzi seems to be catching up to them.


    "An article that was published in a major Chinese news source stated that in the past few months, more and more China real estate developers are seeking emergency loans in order to support the local shark loan operators, since more and more real estate developers are experiencing cash flow problems due to low transaction volume in the real estate market.


    This is how this ponzi scheme works:
    Local governmental officials, that are demanded from the government to produce double digit GDP growth numbers give real estate developers permits to build housing projects in return for bribes. They also get bribes in return for allowing the shark loan companies to operate under their jurastiction. some of them are active partners in shark loan businesses. For example, a party secretary of legal affairs, that controls the public security bureau, which is a court and prosecutor division of government in yongkang city, in zhe jiang province tired to run abroad using a passport in 2009 after he found out he can’t repay 60million Yuan. In li Every scheme has a ring leader who's job is to collect money from all the participants in the ponzi scheme. When some of these ponzi schemes blow up, the party leaders always get bailed out first, and some even ask local business owners to lend them money, and then bail out their own personal fund. After that the ring leader turns himself in and gets protection from the local government.


    Most of the funds that are collected in this classic ponzi finance go to local land purchases and real estate development. Part of the funds are used in order to pay back the rolling loan. The short term interest rate in this black market is very high and ranges between 20%-150% annual rate. The sources of the ponzi funds are diverse, as ordinary citizens, banks with corrupted bank officials, and state enterprises play the game."



    The corruption is huge....eventually people realize the scam. Or this is a very clever way to keep the yuan from floating higher.
    29 Jun 2010, 06:30 AM Reply Like
  • vtorch
    , contributor
    Comments (288) | Send Message
    The drop in total floor space isn't surprising given the fact that the Chinese government is throwing everything and the kitchen sink to rein in property prices. In fact, a 0.1% decrease in total floor space is surprisingly mild. I'm surprised (and a little frustrated) that real estate prices are still holding up after all the measures, because they are seriously overvalued in the region.


    All that said, the Chinese is still flooding in cash. Take Hong Kong retail sales as a proxy. In April 2010, the number of visitors from the mainland to the city grew by 18% to 1.7 million people, while retail sales grew by 12%, following a 17% increase in March.
    29 Jun 2010, 07:29 AM Reply Like
  • just_another_pembrokian
    , contributor
    Comments (44) | Send Message
    Uhh... you do realise that this "China Leading Indicator" was published by the US Conference Board and they had some calculation error, it has nothing to do with Chinese government even though it may will be corrupt at some levels.
    29 Jun 2010, 08:08 AM Reply Like
  • vtorch
    , contributor
    Comments (288) | Send Message
    For goodness sake, the LEI is 145, not 0.3%. The revision of 0.3% is to the growth of the LEI, down from a previous estimated growth of 1.7%.


    What this means is that the Conference Board expects moderation of growth. China, and the world, cannot afford further acceleration of growth in China (Q1 GDP growth of 11%) due to the danger of overheating, massive asset bubbles and widespread inflation. If inflation in China increases further, wages will have to rise, and without a viable alternative to manufacturing elsewhere in the world, prices of goods will increase for those in the developed world. This, coupled with increased savings rates and austerity measures in the developed world, will create a drag for economic activity. The world is better off if inflation in China is contained.
    29 Jun 2010, 07:24 AM Reply Like
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