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It was this that caught my eye at first: "It goes without saying that the lower the particular banks "cash on hand" (asset) when compared to its "deposits" (liability), the quicker the problem rears its ugly head." You see I keep getting invited to banking conferences where exactly the opposite is frequently described; that their assets are the debt lent out while agreed that the liabilities are the deposits.
Other than that yes indeed, this is a highly plausible paper describing what would, over the long term, become a repeat of the arrival in the UK of what was then called the Eurodollar. Importantly I received in 1971 a detailed description of the advantages of securing access to such Eurodollars from a then very successful hotelier who owned several hotels purchased using the "new" currency. So every cloud has a silver lining other than the ultimate ownership of the RMB, the CCP.
deepthroat's earlier posts lay out his scenario in more detail. he believes that all the foreign [non-chinese] currency earned by china was recycled through places like the caymans and used to buy a variety of assets. he also believes that every "private" purchase of assets like real estate by chinese nationals was really a straw man purchase by the chinese communist party.
ultimately it will all be shown to be a pump and dump. the money drives up the asset prices. at some key moment xi will signal "sell" and it will all come crashing down. the ccp will then buy back all the assets at fire sale prices and own the world.
deepthroat's earlier posts lay out his scenario in more detail. he believes that all the foreign [non-chinese] currency earned by china was recycled through places like the caymans and used to buy a variety of assets. he also believes that every "private" purchase of assets like real estate by chinese nationals was really a straw man purchase by the chinese communist party.
ultimately it will all be shown to be a pump and dump. the money drives up the asset prices. at some key moment xi will signal "sell" and it will all come crashing down. the ccp will then buy back all the assets at fire sale prices and own the world.
But that requires a buyer with available funds so, if I have that correctly, the CCP buys their own asset but using RMB's?
deepthroat's earlier posts lay out his scenario in more detail. he believes that all the foreign [non-chinese] currency earned by china was recycled through places like the caymans and used to buy a variety of assets. he also believes that every "private" purchase of assets like real estate by chinese nationals was really a straw man purchase by the chinese communist party.
ultimately it will all be shown to be a pump and dump. the money drives up the asset prices. at some key moment xi will signal "sell" and it will all come crashing down. the ccp will then buy back all the assets at fire sale prices and own the world.
Hmmm. I'm starting to wish we were back in simpler times when conspiracy theories involved who really shot JFK.
Mike, everyone, something to think about; if the banking majors are not holding the deposits of shadow banking, then where is all that money deposited? And, remember we are talking about hundreds of trillions . . .
My view is that we need to go back to the origins of the underlying problem; when Wall Street made the profound decision to drastically increase their leverage, (Mervyn King opined to 50 or more), or that they did indeed go to what I believe, several hundred or more; they could not hold that rubbish, (for that is what it is), on their accounts; and in which case that was the start of the creation of hedge funds. So you rang up your friends, (even EJ got such a call), and offered them a large wad of this grossly over-leveraged money, let us suggest on terms like this: "Hey take say, $300B, give me say, 4% interest and you hire some "Quants" and buy a large computer system that will give you a steady income of, say, 12% over and above our interest charge".
That the rubbish has been spread throughout the entire system. We regularly see examples of such money being used to buy up assets by hedge funds. They have been pumping and dumping since 2008. So the problem is not China, but our own hedge funds doing exactly the same as has been suggested by China. Are we about to see, (the long expected by me here), collapse of the entire banking system caused not by the likes of China pumping and dumping; but by the hedge fund system holding the primary deposits of shadow banking that have now reached their own end game, and the liquidity problem is caused by using massive quantities of totally rubbish paper, cut so thin by several hundred or more leverage; the underlying assets are simply undiscoverable; valueless! . . . ?
I don't understand most of what he says, but it sounds like the rest of December could be rough sledding. He is predicting QE4 before year end.
i believe credit suisse just made the same prediction. otoh, i think we already have qe4 through the $60B and more via the repo facility, they just want to emphasize that it's not qe. but if it looks like qe, and smells like qe, and walks like qe...
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