perceptions_now wrote on Oct 27^th, 2011 at 10:58pm:


Care to take a road trip from Brisbane to Sydney in a Model T Ford?  I think all this postulating about the end of the world as a result of peak oil is ridiculous , and completely disregards human endeavour.  We will overcome it or perish, either way there's not much point getting all consumed by it.

Here is one take of the possible repercussions or consequences of the Greek problem.

As far as can kicks go, this one was not a bad effort. The question you should ask, though, is how long it will take the market to accept this latest European bailout still doesn't solve any fundamental problems. It is just a shameless attempt for gain without pain.

-- Let's look at a few of the details. Greece will get a 50 per cent haircut on its debt? Not so fast. Their total debt load is a mind-boggling €350 billion. This includes around €70 billion in loans from the IMF etc. and about €75 billion that the European Central Bank (ECB) has kindly purchased from the private sector.

-- These amounts will not be subject to a haircut, so Greece is still on the hook for this debt. That leaves around €200 billion subject to the 50 per cent reduction...which actually means it's only a (roughly) 30 per cent trim (we wouldn't even call it a haircut).

-- Given Greek pension funds and banks own a decent chunk of this outstanding amount, it's easy to see who's really paying for this. Banks 1 Greece 0.

-- As an aside, events like this go to show the mainstream press are not up to the task of reporting the facts. Today's front page of the Australian says the haircut will cost banks €150 billion. Then one dot point later it says banks will be forced to strengthen their balance sheets by €106 billion...which, if true, would leave a capital deficit of €44 billion. Clearly, it's not true.

-- This will apparently leave Greece with a debt-to-GDP (Gross domestic product, or economic growth) ratio of 120 per cent by 2020. The Bank for International Settlements recently released a paper showing debt levels were bad for growth when debt hit around 85 per cent of GDP.

-- How is Greece meant to return to private debt markets and borrow unassisted with a still debilitating debt load? (Banks 2 Greece 0).

-- But that's not really the point of this whole exercise. It's a political stunt designed for maximum gain and minimum pain. And as far as the European Financial Stability Facility (EFSF) goes, there's only 'agreement' to leverage it up, with no concrete details on where the money will come from.

-- Apparently the 'rich' nations of China and Brazil (the ones with income per head of population much lower than the countries they are meant to be helping) will stump up some cash for the EFSF. We'll see. If they have any brains they'll steer clear.

-- And China could well be occupied with its own problems. According to a recent FT report...

In recent days, small and sporadic demonstrations have broken out at a handful of real estate sales offices in large cities such as Shanghai, with angry recent homebuyers organising sit-ins and demanding refunds after developers started offering discounts on neighbouring apartments to attract new customers.

-- The cracks are starting to appear in China's property and fixed asset investment bubble. Authorities have halted work on 6,000 miles of railway construction because financing has dried up.

-- As we pointed out in our Sound Money. Sound Investments report earlier this week, the government has stepped in to guarantee the debts of the Railway Ministry to try to get credit flowing to the sector again.

-- Good luck...the Ministry has a debt load of around US$330 billion, or 5 per cent of GDP. There is so much overcapacity and inefficiency that debt has grown faster than the revenues from the network.

-- As China's investment boom subsides - and it surely will - there will be plenty of other ministries and broke local governments putting their hand out for central government support and guarantees.

-- If you think Western nations are liberal with the bailouts, wait until China buckles under the weight of its credit boom. Everyone who bought an apartment in the past two years will be screaming at the government to get his or her money back.

-- As a result, the Chinese government's fiscal position will be much more precarious this time next year. So Europe better hurry up and coax money out of the Chinese while the central planners are still labouring under the misapprehension they can control their economy.

from moneymorning.com  - not available yet.

More to follow.

qikvtec wrote on Oct 28^th, 2011 at 5:11pm:



right on both counts, only the other way around......hopefully.

BOSTON (MarketWatch) — Forget Greece. Forget Italy. Forget “Occupy Wall Street.”

The really ominous news right now?

China.

It’s been the juggernaut carrying us all year. But Albert Edwards at SG Securities says the world’s second biggest economy is a “freak” and it’s starting to go berzerk.

Bad news.

What’s going wrong? How? Here are some troubling signs:

The housing bubble is finally bursting.

And we know how that story ends. Think: America, Ireland and half the West since about 2005. Think of Japan after 1990. Think of…well, every housing bubble in history.

The aftermath of a burst bubble is unmitigated disaster. That’s because housing affects everybody — middle-class families, developers, banks, local government. It’s the Spanish flu epidemic of real estate bubbles. There’s no containing it.

The bubble has been as big as any we’ve seen.

Massive high-rise real estate projects have erupted across the country in recent years. Visitors tell stories of giant, empty condo buildings — “ghost” cities. Prices in the major cities have skyrocketed. And newly middle-class investors have piled in.

They’ve never seen a housing bust. They assumed it will go on forever.

Ten years ago, homes in Shanghai sold for about six times an average family’s income. Today that’s 13 times. Shenzhen has gone from five times to 14 times. These are off-the-charts absurd ratios. This is a bona fide mania.

And it works fine until the music stops.

Where are we now?

Prices have started falling. Now, fewer than 46 of 70 major cities saw prices stall or decline in September, reports the National Statistical Bureau. As recently as January the number was just 10.

Analysts at DBS Vickers Securities say developers are now slashing prices to move unsold inventory, and they see a lot more to come in the next few months.

The credit bubble is imploding.

What would a housing bust be without a credit bust? This will be the mother of all implosions, too.



An alarming report from Schroders said Chinese banking operates in a “twilight zone” of phony accounting and shadow money and it’s all coming apart. “Almost half of all credit creation in China is off balance sheet,” wrote the team at Schroders.

They think this situation could unravel “over the next three to six months,” producing a huge crisis with international implications. Most Chinese banks, they predict, will end up as “zombie banks.”

The canary in the coal mine might be the boom city of Wenzhou in the south. On a single day last month, nine company bosses all suddenly went on the lam to avoid bankruptcy. Nine on one day.

The stock market is signaling trouble.

It’s a mistake to assume the stock market is always correct, but generally speaking when it signals a downturn it does so pretty clearly.

And what it’s saying about China is alarming.

Chinese stock prices have slumped by 22% since July, says FactSet.

Albert Edwards at SG Securities warned that China’s long-running investment boom has no precedent and is bound to burst. “China is a ‘freak’ economy,” he wrote. “To my knowledge no other economy in history has experienced such high investment/GDP ratios and seen so many sequential years of strong investment growth.” The Asian tigers in the 1990s? Japan? Nothing comes close, says Edwards.

That boom has helped carry the world economy through the troubles of the past five years. What happens if it, too, ends?

Don’t ask.

Link -
http://www.marketwatch.com/story/watch-out-for-chinas-freak-economy-2011-10-25?p...
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http://chart.finance.yahoo.com/zs=000001.SS&t=6m&q=l&l=on&z=l&a=v&p=s&lang=en-AU&region=AU

perceptions_now wrote on Oct 28^th, 2011 at 9:19pm:


Thank you kindly for your belly rumbling laugh; I could see the positive side of a cancer diagnosis, you on the other hand would see the negative side of a world record lottery win.

perceptions_now wrote on Oct 29^th, 2011 at 2:31pm:


You could do with a hefty dose of the later, a good case in point are your 200 page diatribes essentially spewing the same crap.  I don't for a second pretend there are not structural problems, the reality is we will overcome them or perish; my money's on the former.

After every major global financial crisis we see the same old crap being bandied around; this time it's different; trouble for the chicken little's is that it isn't.

I invest for income with little regard for the capital value of my investments, in fact the cheaper I can buy them the better.

We will always disagree on the end of the world scenarios you are oh so fond of.