Yes Virginia...It's a Bubble...

[jk]

Re: Yes Virginia...It's a Bubble...

If China says gold is now worth $20,000/oz in goods bought in China, why would any of their (non-American) trading partners care?

1. the immediate answer is that their care would be inversely proportional to their gold holdings.
2. the bigger answer is that that they would care to the degree that they feel threatened by china's assertion of the power to make such a unilateral declaration.
3. another thought is that this is essentially equivalent to china making a market bid for gold at $20k/oz, but redeemable only in the equivalent value of chinese products.
4. gold would then trade at a discount to the 20k value for market participants who don't themselves want to buy chinese products with the proceeds.

[coolhand]

Re: Yes Virginia...It's a Bubble...

1. the immediate answer is that their care would be inversely proportional to their gold holdings.
2. the bigger answer is that that they would care to the degree that they feel threatened by china's assertion of the power to make such a unilateral declaration.
3. another thought is that this is essentially equivalent to china making a market bid for gold at $20k/oz, but redeemable only in the equivalent value of chinese products.
4. gold would then trade at a discount to the 20k value for market participants who don't themselves want to buy chinese products with the proceeds.

IMO, people are making this way more complicated than it is. There are only 2 currencies that have ever priced oil since it became the world's primary energy source, which is the key to economic growth & the ultimate WACC for any economy (energy): Gold & dollars.

The world didn't like using dollars b/c it involved taking an IOU from the Americans that everyone knew the US could never pay back in real terms but everyone went along w/it b/c it worked & b/c there was no alternative, & the Americans were the biggest trader of real stuff.

As of 2008, that system no longer works (witness 6 years of nonstop QE just to avoid collapse) & an alternative is being made by China - trade in yuan, settle in gold, the only other currency that has ever settled oil. This seems extreme but its the same system (but without a fixed price for gold, which dooms such a system) that has existed for all of mankind's history ex-1914-1920 & 1971-present. It is just Keynes' "Bancor" proposal from Bretton Woods come to fruition.

It wouldn't just be Chinese products you could get for $20,000 gold - I am sure Russia, India, Saudi Arabia, Iran, Iraq, Brazil - all would be happy to take gold valued at $20,000/oz in exchange for oil, food & other products & services. Ditto the Europeans - their 10,000 tons marked-to-mkt qtrly would nearly fully collateralize all sovereign debt.

This is what the world is still missing IMO - in the next emerging market crisis, they won't need dollars for real goods b/c they are the dominant producers of real goods. The world expects emerging markets to hold a fire sale on assets just to preserve a status quo that is not in their interest when they can just as easily recollateralize their system by changing the trade settlement mechanism. In English - this time, they won't write down their assets to get dollars, they will leave the dollar & write up gold to recollateralize the system. The trade settlement system has been set up to settle trade in yuan/gold. If you are the BRICS, if the shit hits the fan, why scramble for dollars when you can just change the system, trade in yuan & settle in gold.

Look at the trade balance of the BRICS v. the US. There is nothing those nations need the US for on a net basis. The US needs those nations very desperately on a net basis. American Wal-Mart would be empty in just weeks without the BRICS; Chinese Wal-Mart would not be empty without the US - this was NOT the case in 1997.

Read what the former World Bank Chief Economist (Chinese, advising Chinese gov't) said last week - the dollar is the problem, the yuan is not the solution (but is part of the solution) - a supra-national currency is needed to eliminate the Triffin Dilemma of using the dollar. China absolutely understands this & is buying gold like crazy likely b/c of it.

[shiny!]

Re: Yes Virginia...It's a Bubble...

IMO, people are making this way more complicated than it is. There are only 2 currencies that have ever priced oil since it became the world's primary energy source, which is the key to economic growth & the ultimate WACC for any economy (energy): Gold & dollars.

The world didn't like using dollars b/c it involved taking an IOU from the Americans that everyone knew the US could never pay back in real terms but everyone went along w/it b/c it worked & b/c there was no alternative, & the Americans were the biggest trader of real stuff.

As of 2008, that system no longer works (witness 6 years of nonstop QE just to avoid collapse) & an alternative is being made by China - trade in yuan, settle in gold, the only other currency that has ever settled oil. This seems extreme but its the same system (but without a fixed price for gold, which dooms such a system) that has existed for all of mankind's history ex-1914-1920 & 1971-present. It is just Keynes' "Bancor" proposal from Bretton Woods come to fruition.

It wouldn't just be Chinese products you could get for $20,000 gold - I am sure Russia, India, Saudi Arabia, Iran, Iraq, Brazil - all would be happy to take gold valued at $20,000/oz in exchange for oil, food & other products & services. Ditto the Europeans - their 10,000 tons marked-to-mkt qtrly would nearly fully collateralize all sovereign debt.

This is what the world is still missing IMO - in the next emerging market crisis, they won't need dollars for real goods b/c they are the dominant producers of real goods. The world expects emerging markets to hold a fire sale on assets just to preserve a status quo that is not in their interest when they can just as easily recollateralize their system by changing the trade settlement mechanism. In English - this time, they won't write down their assets to get dollars, they will leave the dollar & write up gold to recollateralize the system. The trade settlement system has been set up to settle trade in yuan/gold. If you are the BRICS, if the shit hits the fan, why scramble for dollars when you can just change the system, trade in yuan & settle in gold.

Look at the trade balance of the BRICS v. the US. There is nothing those nations need the US for on a net basis. The US needs those nations very desperately on a net basis. American Wal-Mart would be empty in just weeks without the BRICS; Chinese Wal-Mart would not be empty without the US - this was NOT the case in 1997.

Read what the former World Bank Chief Economist (Chinese, advising Chinese gov't) said last week - the dollar is the problem, the yuan is not the solution (but is part of the solution) - a supra-national currency is needed to eliminate the Triffin Dilemma of using the dollar. China absolutely understands this & is buying gold like crazy likely b/c of it.

Sounds entirely logical, but I'm not knowledgeable enough to see a "gotcha" in this argument that could be apparent to others.

How would the U.S. gov't respond to an overnight repricing of gold to $20,000? Would it have to go along to get along, or could the U.S. somehow resist? Given our national debt, I would think that gold at $20,000/oz be in our best interest as well.

Even if gold were to be repriced to $20,000/oz, I don't think the U.S. gov't will allow small individual holders who bought when gold was low to profit when they try to sell. I have nothing to base this on other than a gut feeling.

[jk]

Re: Yes Virginia...It's a Bubble...

IMO, people are making this way more complicated than it is. There are only 2 currencies that have ever priced oil since it became the world's primary energy source, which is the key to economic growth & the ultimate WACC for any economy (energy): Gold & dollars.

The world didn't like using dollars b/c it involved taking an IOU from the Americans that everyone knew the US could never pay back in real terms but everyone went along w/it b/c it worked & b/c there was no alternative, & the Americans were the biggest trader of real stuff.

As of 2008, that system no longer works (witness 6 years of nonstop QE just to avoid collapse) & an alternative is being made by China - trade in yuan, settle in gold, the only other currency that has ever settled oil. This seems extreme but its the same system (but without a fixed price for gold, which dooms such a system) that has existed for all of mankind's history ex-1914-1920 & 1971-present. It is just Keynes' "Bancor" proposal from Bretton Woods come to fruition.

It wouldn't just be Chinese products you could get for $20,000 gold - I am sure Russia, India, Saudi Arabia, Iran, Iraq, Brazil - all would be happy to take gold valued at $20,000/oz in exchange for oil, food & other products & services. Ditto the Europeans - their 10,000 tons marked-to-mkt qtrly would nearly fully collateralize all sovereign debt.

This is what the world is still missing IMO - in the next emerging market crisis, they won't need dollars for real goods b/c they are the dominant producers of real goods. The world expects emerging markets to hold a fire sale on assets just to preserve a status quo that is not in their interest when they can just as easily recollateralize their system by changing the trade settlement mechanism. In English - this time, they won't write down their assets to get dollars, they will leave the dollar & write up gold to recollateralize the system. The trade settlement system has been set up to settle trade in yuan/gold. If you are the BRICS, if the shit hits the fan, why scramble for dollars when you can just change the system, trade in yuan & settle in gold.

Look at the trade balance of the BRICS v. the US. There is nothing those nations need the US for on a net basis. The US needs those nations very desperately on a net basis. American Wal-Mart would be empty in just weeks without the BRICS; Chinese Wal-Mart would not be empty without the US - this was NOT the case in 1997.

Read what the former World Bank Chief Economist (Chinese, advising Chinese gov't) said last week - the dollar is the problem, the yuan is not the solution (but is part of the solution) - a supra-national currency is needed to eliminate the Triffin Dilemma of using the dollar. China absolutely understands this & is buying gold like crazy likely b/c of it.

america is still the consumer of last resort. the em's are productive economies, no doubt, but what they produce they are not prepared to consume. the product mix is wrong, and em incomes are inadequate. they are export led economies, not easily or quickly refashioned.

china, i would think, would be loath to both cut itself off from american markets and effectively decimate - literally- their reserves by marking up gold about 10x. at some point they may be willing to pay that price, when they have either found other markets or reshaped their production and raised domestic incomes. in the meantime, the dollar remains the world's reserve currency. i think it is likely to be the last fiat standing, the last to go, not among the first.

[GRG55]

Re: Yes Virginia...It's a Bubble...

america is still the consumer of last resort. the em's are productive economies, no doubt, but what they produce they are not prepared to consume. the product mix is wrong, and em incomes are inadequate. they are export led economies, not easily or quickly refashioned.

china, i would think, would be loath to both cut itself off from american markets and effectively decimate - literally- their reserves by marking up gold about 10x. at some point they may be willing to pay that price, when they have either found other markets or reshaped their production and raised domestic incomes. in the meantime, the dollar remains the world's reserve currency. i think it is likely to be the last fiat standing, the last to go, not among the first.

There are some extraordinary myths that persist in the minds of some of the China/EM bulls that post here. Some day maybe EJ should do a fact based iTulip Economic Mythbuster's posting.

Here is my small contribution. It is a bit out of date but what I had readily at hand in the time available. As you point out, China needs the USA market a whole lot more than the USA needs Chinese suppliers. That is even more so since the financial crisis drove the US cost structure down.

But then facts may not matter for those who are emotionally caught up with the idea that "the USA is finished" as a world power and the Dollar is toast. The Dollar may ultimately be headed for the toaster, but the exorbitant privilege looks to remain intact for quite some time yet.

[GRG55]

Re: Yes Virginia...It's a Bubble...

...Look at the trade balance of the BRICS v. the US. There is nothing those nations need the US for on a net basis. The US needs those nations very desperately on a net basis. American Wal-Mart would be empty in just weeks without the BRICS...

So what? Do you actually believe that Wal Mart is the American economy? Or even closely reflective of it?

Some Economyths need to busted. Wal Mart clocked $264 Billion in US sales in 2012. The US economy was more than $15 Trillion.

From the Federal Reserve Bank of San Francisco (full study available at the link):

The U.S. Content of “Made in China”

Galina Hale and Bart Hobijn

Goods and services from China accounted for only 2.7% of U.S. personal consumption expenditures in 2010, of which less than half reflected the actual costs of Chinese imports. The rest went to U.S. businesses and workers transporting, selling, and marketing goods carrying the “Made in China” label. Although the fraction is higher when the imported content of goods made in the United States is considered, Chinese imports still make up only a small share of total U.S. consumer spending. This suggests that Chinese inflation will have little direct effect on U.S. consumer prices.

...Read what the former World Bank Chief Economist (Chinese, advising Chinese gov't) said last week - the dollar is the problem, the yuan is not the solution (but is part of the solution) - a supra-national currency is needed to eliminate the Triffin Dilemma of using the dollar. China absolutely understands this & is buying gold like crazy likely b/c of it.

Of course the US Dollar is a problem. The good thing, to paraphrase the late John Connolly, is that it's their problem. The manipulated currency of a corrupt kleptocracy is hardly part of the solution...unless of course one is part of the manipulation, the corruption and the kleptocracy. Unfortunately China and USA are hardly different in that regard any longer...

[EJ]

Re: Yes Virginia...It's a Bubble...

So what? Do you actually believe that Wal Mart is the American economy? Or even closely reflective of it?

Some Economyths need to busted. Wal Mart clocked $264 Billion in US sales in 2012. The US economy was more than $15 Trillion.

From the Federal Reserve Bank of San Francisco (full study available at the link):

The U.S. Content of “Made in China”

Galina Hale and Bart Hobijn

Goods and services from China accounted for only 2.7% of U.S. personal consumption expenditures in 2010, of which less than half reflected the actual costs of Chinese imports. The rest went to U.S. businesses and workers transporting, selling, and marketing goods carrying the “Made in China” label. Although the fraction is higher when the imported content of goods made in the United States is considered, Chinese imports still make up only a small share of total U.S. consumer spending. This suggests that Chinese inflation will have little direct effect on U.S. consumer prices.









Of course the US Dollar is a problem. The good thing, to paraphrase the late John Connolly, is that it's their problem. The manipulated currency of a corrupt kleptocracy is hardly part of the solution...unless of course one is part of the manipulation, the corruption and the kleptocracy. Unfortunately China and USA are hardly different in that regard any longer...

Goods imports increased from 6.7% of GDP in 1993 to a high of 12.5% of GDP in 2008 with the peak in oil prices and oil imports.
Reduced oil imports and lower oil prices have reversed the trend since 2011 to 11.4% of GDP in 2013.





Goods imports from China are around 20% of the 11.4% of GDP in goods imports, or 2.3% of GDP.




Countries that export the most to the U.S.




Countries that the U.S. exports the most goods to.

[GRG55]

Re: Yes Virginia...It's a Bubble...

Goods imports from China are around 20% of the 11.4% of GDP in goods imports, or 2.3% of GDP.




Countries that export the most to the U.S.

A LOT of seasonality to the imports flows from China. Christmas season trinkets one assumes?

If so, or something similar, implies China has a comparatively high dependence on just a few sectors in the US consumer market??

[GRG55]

Re: Capital MisAllocation...

Where to put all that surplus steel and cement? Why bury some of it underwater of course...now why didn't we think of that...

China rail, material stocks soar on investment optimism

Tue Jul 23, 2013 8:20am IST

(Reuters) - Shares in Chinese rail and building material companies bounced higher on Tuesday morning fuelled by optimism that plans to boost railway expansion would ease a glut in sectors such as steel and cement.

The Chinese government planned to use investments in high-speed railways to help reduce overcapacity in those and other construction material sectors, the official Shanghai Securities News reported on Tuesday.

By 0220 GMT, shares of China Railway Construction jumped 5 percent in Hong Kong and 6.1 percent in Shanghai.Anhui Conch Cement rose 1.1 percent in Hong Kong and 1.4 percent in Shanghai. The Shanghai materials sub-index was a standout outperformer among sectors, rising 3.2 percent.

The report, along with reported comments from the country's Premier Li Keqiang and Vice Premier Zhang Gaoli, helped lift stock markets in Hong Kong and China in rising volumes. The China Enterprises Index of the top Chinese listings in Hong Kong jumped more than 3 percent.

The newspaper said, citing unnamed sources close to the government, that the railway department had completed only one third of its planned investment in the first half of this year, so there would be room for a quicker pace of investment in the second half of this year.

The investment could include the world's longest undersea tunnel across the Bohai Strait, linking China's eastern and northeastern regions, worth 260 billion yuan ($42 billion) as previously reported, the newspaper said...

One chart that sums it all up:

[GRG55]

Re: Capital MisAllocation...

What goes around, comes around...

World asleep as China tightens deflationary vice

8:00PM GMT 12 Feb 2014

China's Xi Jinping has cast the die. After weighing up the unappetising choice before him for a year, he has picked the lesser of two poisons.

The balance of evidence is that most powerful Chinese leader since Mao Zedong aims to prick China's $24 trillion credit bubble early in his 10-year term, rather than putting off the day of reckoning for yet another cycle.

This may be well-advised for China, but the rest of the world seems remarkably nonchalant over the implications. Brazil, Russia, South Africa, and the commodity bloc are already in the cross-hairs.

"China is getting serious about deleveraging," says Patrick Legland and Wei Yao from Societe Generale. "It is difficult to gently deflate a bubble. There is a very real possibility that this slow deflation may get out of control and lead to a hard landing." ...

...What is clear is that we are dealing with a credit expansion of unprecedented scale, equal in size to the US and Japanese banking systems combined...

...Societe Generale has defined its hard landing as a fall in Chinese growth to a trough of 2pc, with two quarters of contraction. This would cause a 30pc slide in Chinese equities, a 50pc crash in copper prices, and a drop in Brent crude to $75...

...The tell-tale signs are obvious in the central bank's handling of reverse repos and maturing bills. The yield on corporate AA 1-year bonds has jumped 272 basis points to 7.15pc since June. "We think the PBOC intends to raise the whole spectrum of interest rates to push deleveraging," he said.

This will be a rough ride. JP Morgan's Haibin Zhu says the shadow banking system alone has jumped from $2.4 to $7.7 trillion since 2010, and is now 84pc of GDP. To put this in perspective, the total US subprime debacle was $1.2 trillion.

Haibin Zhu says there is mounting risk of "systemic spillover". Two thirds of the $2 trillion of wealth products must be rolled over every three months. A third of trust funds mature this year. "The liquidity stress could evolve into a full-blown credit crisis," he said...

[jk]

Re: Capital MisAllocation...

What goes around, comes around...

World asleep as China tightens deflationary vice

8:00PM GMT 12 Feb 2014

China's Xi Jinping has cast the die. After weighing up the unappetising choice before him for a year, he has picked the lesser of two poisons.

The balance of evidence is that most powerful Chinese leader since Mao Zedong aims to prick China's $24 trillion credit bubble early in his 10-year term, rather than putting off the day of reckoning for yet another cycle.

This may be well-advised for China, but the rest of the world seems remarkably nonchalant over the implications. Brazil, Russia, South Africa, and the commodity bloc are already in the cross-hairs.

"China is getting serious about deleveraging," says Patrick Legland and Wei Yao from Societe Generale. "It is difficult to gently deflate a bubble. There is a very real possibility that this slow deflation may get out of control and lead to a hard landing." ...

...What is clear is that we are dealing with a credit expansion of unprecedented scale, equal in size to the US and Japanese banking systems combined...

...Societe Generale has defined its hard landing as a fall in Chinese growth to a trough of 2pc, with two quarters of contraction. This would cause a 30pc slide in Chinese equities, a 50pc crash in copper prices, and a drop in Brent crude to $75...

...The tell-tale signs are obvious in the central bank's handling of reverse repos and maturing bills. The yield on corporate AA 1-year bonds has jumped 272 basis points to 7.15pc since June. "We think the PBOC intends to raise the whole spectrum of interest rates to push deleveraging," he said.

This will be a rough ride. JP Morgan's Haibin Zhu says the shadow banking system alone has jumped from $2.4 to $7.7 trillion since 2010, and is now 84pc of GDP. To put this in perspective, the total US subprime debacle was $1.2 trillion.

Haibin Zhu says there is mounting risk of "systemic spillover". Two thirds of the $2 trillion of wealth products must be rolled over every three months. A third of trust funds mature this year. "The liquidity stress could evolve into a full-blown credit crisis," he said...

aep is always full of good cheer and optimism.

[ProdigyofZen]

Re: Capital MisAllocation...

What goes around, comes around...

World asleep as China tightens deflationary vice

8:00PM GMT 12 Feb 2014

China's Xi Jinping has cast the die. After weighing up the unappetising choice before him for a year, he has picked the lesser of two poisons.

The balance of evidence is that most powerful Chinese leader since Mao Zedong aims to prick China's $24 trillion credit bubble early in his 10-year term, rather than putting off the day of reckoning for yet another cycle.

This may be well-advised for China, but the rest of the world seems remarkably nonchalant over the implications. Brazil, Russia, South Africa, and the commodity bloc are already in the cross-hairs.

"China is getting serious about deleveraging," says Patrick Legland and Wei Yao from Societe Generale. "It is difficult to gently deflate a bubble. There is a very real possibility that this slow deflation may get out of control and lead to a hard landing." ...

...What is clear is that we are dealing with a credit expansion of unprecedented scale, equal in size to the US and Japanese banking systems combined...

...Societe Generale has defined its hard landing as a fall in Chinese growth to a trough of 2pc, with two quarters of contraction. This would cause a 30pc slide in Chinese equities, a 50pc crash in copper prices, and a drop in Brent crude to $75...

...The tell-tale signs are obvious in the central bank's handling of reverse repos and maturing bills. The yield on corporate AA 1-year bonds has jumped 272 basis points to 7.15pc since June. "We think the PBOC intends to raise the whole spectrum of interest rates to push deleveraging," he said.

This will be a rough ride. JP Morgan's Haibin Zhu says the shadow banking system alone has jumped from $2.4 to $7.7 trillion since 2010, and is now 84pc of GDP. To put this in perspective, the total US subprime debacle was $1.2 trillion.

Haibin Zhu says there is mounting risk of "systemic spillover". Two thirds of the $2 trillion of wealth products must be rolled over every three months. A third of trust funds mature this year. "The liquidity stress could evolve into a full-blown credit crisis," he said...

Does China get to the zero lower bound/ZIRP policy? They have a long way to go with regards to interest rates to get there.

Could this be China's great depression? Does this make the US, England in 1929?

[jk]

Re: Capital MisAllocation...

Does China get to the zero lower bound/ZIRP policy? They have a long way to go with regards to interest rates to get there.

Could this be China's great depression? Does this make the US, England in 1929?

england fared a lot better than the u.s. during the great depression. i've seen that analogy drawn from time to time over many years. china:u.s. now = u.s.:u.k. early 20th century. i have no idea whether it works out that way, though the parallels are obvious: rising power vs established hegemon,higher production vs lower production, higher growth vs. slower growth, and so on until you get to the question of whether the yuan replaces the dollar just as the dollar replaced the pound as the global reserve and trading currency. there's a long way to go to get there, though, since the yuan isn't convertible, but moving only slowly in that direction.

[GRG55]

Re: Capital MisAllocation...

Does China get to the zero lower bound/ZIRP policy? They have a long way to go with regards to interest rates to get there.

Could this be China's great depression? Does this make the US, England in 1929?

I seriously doubt it. I don't think they have any intention of taking away the punchbowl, despite AEP's assertions otherwise. EVERY single time the Chinese have the smallest indication of a slowdown after they half heartedly "tighten", they blink. They take the still open money spigot and crank the valve wide.


This was then (January 15, 2014):

China bank lending slows as PBOC walks policy tightrope

BEIJING, Jan 15 (Reuters) - China's new bank lending slowed more than expected in December and broad money supply growth also eased, highlighting the policy tightrope the central bank must walk as it tries to contain risky debt levels without braking the economy too hard.

There is little sign of a sharp tightening in monetary policy, but rising money market rates and bond yields in recent months indicate the People's Bank of China is committed to removing excessive debt from the economy to head off potential financial risks...

And this is now (February 15, 2014):

China January New Credit Rises to Record as Bank Loans Surge

Bloomberg News

Feb 15, 2014 11:01 am ET

Feb. 15 (Bloomberg) -- China’s broadest measure of new credit rose to a record last month as lending surged, indicating the central bank will allow enough funding to sustain economic growth amid a crackdown on shadow financing.

Aggregate financing was 2.58 trillion yuan ($425 billion), in January, the People’s Bank of China said yesterday, exceeding the 1.9 trillion yuan median estimate in a Bloomberg News survey and the previous high of 2.54 trillion yuan a year ago. New local-currency loans were 1.32 trillion yuan, 23 percent more than a year earlier and the highest monthly figure in four years, while trust loans halved amid default concerns...

[ProdigyofZen]

Re: Capital MisAllocation...

I seriously doubt it. I don't think they have any intention of taking away the punchbowl, despite AEP's assertions otherwise. EVERY single time the Chinese have the smallest indication of a slowdown after they half heartedly "tighten", they blink. They take the still open money spigot and crank the valve wide.


This was then (January 15, 2014):

China bank lending slows as PBOC walks policy tightrope

BEIJING, Jan 15 (Reuters) - China's new bank lending slowed more than expected in December and broad money supply growth also eased, highlighting the policy tightrope the central bank must walk as it tries to contain risky debt levels without braking the economy too hard.

There is little sign of a sharp tightening in monetary policy, but rising money market rates and bond yields in recent months indicate the People's Bank of China is committed to removing excessive debt from the economy to head off potential financial risks...

And this is now (February 15, 2014):

China January New Credit Rises to Record as Bank Loans Surge

Bloomberg News

Feb 15, 2014 11:01 am ET

Feb. 15 (Bloomberg) -- China’s broadest measure of new credit rose to a record last month as lending surged, indicating the central bank will allow enough funding to sustain economic growth amid a crackdown on shadow financing.

Aggregate financing was 2.58 trillion yuan ($425 billion), in January, the People’s Bank of China said yesterday, exceeding the 1.9 trillion yuan median estimate in a Bloomberg News survey and the previous high of 2.54 trillion yuan a year ago. New local-currency loans were 1.32 trillion yuan, 23 percent more than a year earlier and the highest monthly figure in four years, while trust loans halved amid default concerns...

We still have to answer the question: How does a Chinese crisis play out and does the rest of the world know it before it is too late and their crisis takes everything with it?

Here in the US we have measurable statistics to understand and pinpoint a coming crisis as EJ has demonstrated for over 15 years, but we have very little with regards to China and their FIRE economy dwarfs ours. I believe they have created 9 trillion worth of debt since Q1 2009. Since 2001 the US has only sent 13 trillion to the entirety of the EM market.