schminkie

The Next Phase of the Crisis Is Beginning with an Eye on China

just a few notes. the prc recognizes the over-sized risk in current bank loans; ie under-capitalized and strong possibility of failed loans . bank collapse. they've been making pronouncements about capitalization of loans which vary in determination.

looks like leverage is around 10 or 13:1.

there's a movement to capitalize the peasantry and rural areas i assume to improve domestic buying power and of course help them to simply live day to day. this has been ongoing one way or another since 1948.

from here, only reading studies releases etc about the chinese recovery, it sounds like the steel/iron ore over-buy is a problem; supply with entirely too few end users, demand. this spills over into shipping, ports businesses and coal.

the prc continues to talk about closing small 'primitive' mines for coal and iron ore and for m&a in those sectors. i think they are sincere but i also think the response has been slow to negligible due to local economies' needs, simply greed among owners of these dangerous and inefficient mines and as always the sheer size of china that has historically made centralization difficult.

on the other hand the prc says that so many cars are being sold that those end users of steel do make the stockpiles at ports rational.

just because some pundits here talk about china's recovery being predominantly reliant on exports, read shipping to the usa, doesn't make it so. in fact i would not be surprised to see growing domestic markets in china and india which could ultimately supplant the u.s. market in which over 1 in 5 [so far] are unemployed or underemployed with little hope in sight, thus a shrinking pool of buyer power, from china or otherwise. in fact i can imagine local international corporations marketing to those new markets and investing in those countries in lieu of ours, the u.s., thus making ours a nation heading toward the so-called 3rd world status.
just say it is not so far fetched a scenario over many years.

pundits and experts said vietnam would never win liberation. they said that the chinese revolution would fail. they said that reorganization of chinese society, economy etc. would not occur thus making it's current economy impossible which of course it is not, as we see. most of them also foresaw no economic collapse till it happened in 2008 and then installed what i believe to be questionable means of recovery.

now i am rambling.,

i'd like to go to china and travel around to see what is actually going on. i doubt that it'd take long to come to some concrete conclusions.

China, Shipping and the Great Commodity Carry Trade

i like this article. it touches on parts of a situation which has been for me a puzzlement. whati want to know is what deals were cut when the pres of brazil went to peijing. a few little points...

in observing the chinese commodities purchases at bargain prices per shipping one might look at china cosco. they bought over 450 dry bulk ships last year from cosco group, their mother-ship as it were. their capacity plus underpinning of the prc gov't make it a safe bet although with caveats. they travel inland rivers, the china coast and the oceans.

drys made a bet on oil and invested in hugely expensive drilling vessels when both ship building, oil prices and drilling leases were in the 2008 stratosphere. but then things changed and that plan lost value. they are working out their debt, debt covenants, payments etc now but their debt and these decisions by management make me uncomfortable.

one of the mainstays of the chinese economy now is or at least would be producing and assembling products [using imported parts] for american companies. with that plus vast infrastructure contracts, china will be reliant on foreign economies for the foreseeable decades. therein go the commodities they are scooping up.

don't forget they are also selling or licensing extraction of commodities within china to american and other companies. also there is resistance to their buying large parts of overseas commodities companies.

if walmart starts printing money i'll worry more!