TooSteep + 142 IS April 18, 2020 I thought I would give this topic it's own thread. There are a lot of astute people on this forum, and I am curious to hear their thoughts on this. There is a blog named 'Deep Throat' - https://deep-throat-ipo.blogspot.com/ - that I spent dozens of hours reading last year. No it's not what you think based on the title It is written by a CPA from Cleveland, and it does a deep, deep dive into Chinese economic data, currencies and accounting. (Oddly, the latest post is now 6 months old. There was a post in December, but it vanished after a day or two. I hope the anonymous author has not been black vanned!) From my understanding, the gist of his theory is something like this: China has a dual currency system - the Hong Kong Dollar (HKD) and Chinese Yuan (CNY). The first is for reconciling international trade with China, the second is for internal usage. (When you step back and think about it, it does seem unusual. Why does a country, that desires to be the world hegemon, not encourage their currency to be primary on the world stage?) Deep Throat proposes that the dual currency system is currently being manipulated to conjure boomerang US dollars, used to purchase western assets. I.e., when a payment is made to China for goods, one copy of that payment boomerangs from HKD back into USD, and another copy goes into CNY for internal use. He claims that there is evidence that the CCP has used these dollars to purchase in excess of $30,000,000,000,000 of western assets. That is $30 trillion. That would be an order of magnitude higher than most estimates. If you spend a few hours and deep dive some of his key posts, you will find the rationale for his thinking. Here are just a few of the posts that stood out to me, in chronological order: https://deep-throat-ipo.blogspot.com/2015/04/chinas-dreamdefying-financial-gravity.html https://deep-throat-ipo.blogspot.com/2016/09/faking-it.html https://deep-throat-ipo.blogspot.com/2016/10/cheap-reading-glasses-handbagsand.html https://deep-throat-ipo.blogspot.com/2018/04/the-new-phone-books-herethe-new-phone.html https://deep-throat-ipo.blogspot.com/2019/02/dalios-big-debt-crisisthe-fsb-report.html https://deep-throat-ipo.blogspot.com/2019/03/a-modest-proposal.html https://deep-throat-ipo.blogspot.com/2019/05/our-inevitable-monetary-journey.html When you read the blog, it is clear that his thinking evolves over time as to 'why' this is happening - he doesn't really know what the end game is. But he provides very compelling evidence that it 'is' happening. So the $30,000,000,000,000 question here: is this really possible? Quote Share this post Link to post Share on other sites
Marcin2 + 725 MK April 18, 2020 7 minutes ago, TooSteep said: I thought I would give this topic it's own thread. There are a lot of astute people on this forum, and I am curious to hear their thoughts on this. There is a blog named 'Deep Throat' - https://deep-throat-ipo.blogspot.com/ - that I spent dozens of hours reading last year. No it's not what you think based on the title It is written by a CPA from Cleveland, and it does a deep, deep dive into Chinese economic data, currencies and accounting. (Oddly, the latest post is now 6 months old. There was a post in December, but it vanished after a day or two. I hope the anonymous author has not been black vanned!) From my understanding, the gist of his theory is something like this: China has a dual currency system - the Hong Kong Dollar (HKD) and Chinese Yuan (CNY). Nope. Hong Kong and China are to separate economies, the same as China and Taiwan and Macau. Hong Kong is just politically under the rule of China, with broad autonomy. The first is for reconciling international trade with China, the second is for internal usage. Nope. Both economies Hong Kong and China use their currences (HKD and CNY) internally and US dollar for majority of foreign trade. (When you step back and think about it, it does seem unusual. Why does a country, that desires to be the world hegemon, not encourage their currency to be primary on the world stage?) Deep Throat proposes that the dual currency system is currently being manipulated to conjure boomerang US dollars, used to purchase western assets. I.e., when a payment is made to China for goods, one copy of that payment boomerangs from HKD back into USD, and another copy goes into CNY for internal use. Nope. They are different economies. I am really curious how the guy (is he really CPA ? No CPA in the world would say that, and I personally know a lot of CPA's) got to this idea, it would be novel in accounting. Which of the links is about this idea ? He claims that there is evidence that the CCP has used these dollars to purchase in excess of $30,000,000,000,000 of western assets. That is $30 trillion. Nope. You can hide 3 million , even 3 billion if you are smart drug lord, but never ever 30 trillion dollars. 30 trillion dollars is more than value of all US physical assets without residential RE. That would be an order of magnitude higher than most estimates. If you spend a few hours and deep dive some of his key posts, you will find the rationale for his thinking. Here are just a few of the posts that stood out to me, in chronological order: https://deep-throat-ipo.blogspot.com/2015/04/chinas-dreamdefying-financial-gravity.html https://deep-throat-ipo.blogspot.com/2016/09/faking-it.html https://deep-throat-ipo.blogspot.com/2016/10/cheap-reading-glasses-handbagsand.html https://deep-throat-ipo.blogspot.com/2018/04/the-new-phone-books-herethe-new-phone.html https://deep-throat-ipo.blogspot.com/2019/02/dalios-big-debt-crisisthe-fsb-report.html https://deep-throat-ipo.blogspot.com/2019/03/a-modest-proposal.html https://deep-throat-ipo.blogspot.com/2019/05/our-inevitable-monetary-journey.html When you read the blog, it is clear that his thinking evolves over time as to 'why' this is happening - he doesn't really know what the end game is. But he provides very compelling evidence that it 'is' happening. So the $30,000,000,000,000 question here: is this really possible? Nope Quote Share this post Link to post Share on other sites
TooSteep + 142 IS April 18, 2020 During the postmortem of a financial crisis (or an accounting fraud), it is easy to sit back and say 'How did we miss that?'. All the red flags, discrepancies, numbers that don't quite add up and warning signs become clear as day post facto. It is suddenly obvious that the reason nobody else had ever had success quite like this before is because the success was built on a fraud. And the questions we should have been asking become clear as day. What are the questions we should ask to understand whether or not a banking system plays by the same rules as the FED, ECB, SNB and BOJ? It has always seemed odd to me that when there is a discussion of centrally managed economies and socialism, everyone brings up Venezuela and nods approvingly that 'of course' it is a terrible system, destined to fail and bring about economic ruin to all citizens. Nobody questions the paradox: How is it, when a western country overextends itself a bit, just 5% really - for example when the USA decided to go from 64% to 69% home ownership rate from 1995-2005 - all hell breaks loose and a global financial crisis is born; but when a centrally managed economy spends 50% of GDP a year on infrastructure for well over two decades, while growing between 8-12% annually, the perpetually pending debt crisis of their massive debt-driven growth never actually materializes? No other country ever got away with more than about 20% annually in infrastructure. How is it that the country with a centrally managed economy is able to finance an unlimited number of railway lines, roads, airports, ports and other infrastructure in Africa, South America, Asia and now Europe - cheerily financing the entire projects as developing nations become debt-serfs - while the west cannot scrape together 2 nickels to fix its own crumbling infrastructure? How is it that in a matter of years, the centrally managed economy country owns a significant share of the worlds container ships, dry bulk carriers, chemical/petroleum tankers and operates 6 of the worlds 10 largest ports? never experiencing stress at financing such growth in such a short time? How is it that just this one centrally managed economy is able to do such things, while all others ( eg. Venezuela), who have corrupt regimes, but have central bankers playing by western rules, suffer the inevitable horrific consequences of a centrally managed economy? How is it that the mighty capitalistic west, starved for cash, enthusiastically sells off all of its mines to the SOEs of the centrally managed economy, who happen to possess unlimited cash to buy all the mines they are offered? How is it that every luxury condo tower in the west - London, New York, Chicago, Sydney, Auckland, Vancouver, Toronto, Zurich, Dallas - has its units purchased, many in cash, by 'businessmen' from the centrally managed economy and nobody ever stops to ask where the money came from? No matter how many units are developed, there is always a new supply of money available for these $1,000,000+ units. How is it that when a massive inflow of money suddenly appears in offshore tax havens, available to buy western bonds and stocks, during a period when the global economy is stumbling along at anemic growth, nobody wonders where the money came from? How is it, when a western city, pick Montreal or Los Angeles, builds some one-off infrastructure for a sporting boondoggle, it suffers negative financial consequences for a generation afterwards; but when a centrally managed economy country does the same, on a much grander scale, there are no financial repercussions? How is it that elite universities in the west are so starved for cash that they open up their precious student openings to foreign students happily willing to pay $80,000 a year for each of their 1,000,000 strong cohort? And the students, coming from a country with a centrally managed economy, don't even blink at the cost? How is it that elites from the country with the centrally managed economy are able to contribute generously to western politicians of all stripes, think-tanks, institutions, and wall-street financiers? Why can nobody else afford to spread so much wealth around? Where did all the money come from? The huge profit margins on cheap plastic trinkets from WalMart were enough to finance the purchase of a large percentage of hard western assets? Really? Why does nobody in the west think to step back and question this? (Perhaps because if you ask the hard questions, some of those conjured dollars might not find their way directly into your pocket?) How is it that no bank in the country with the centrally managed economy ever fails? No debt ever goes unpaid? No financial reckoning ever happens? For over 20 years, hedge funds have been shorting the pending economic collapse, but it never comes. What if the conventional wisdom - that the centrally managed economy is artificially holding down the value of its printing-press outputs, in order to make its exports more competitive with the west - is completely wrong? What if the hard peg is instead, allowing them to operate both sides of a dual currency system? As far as I can tell, the answer to these questions so far has been: It's a miracle! Quote Share this post Link to post Share on other sites
0R0 + 6,251 April 18, 2020 4 hours ago, TooSteep said: I thought I would give this topic it's own thread. There are a lot of astute people on this forum, and I am curious to hear their thoughts on this. There is a blog named 'Deep Throat' - https://deep-throat-ipo.blogspot.com/ - that I spent dozens of hours reading last year. No it's not what you think based on the title It is written by a CPA from Cleveland, and it does a deep, deep dive into Chinese economic data, currencies and accounting. (Oddly, the latest post is now 6 months old. There was a post in December, but it vanished after a day or two. I hope the anonymous author has not been black vanned!) From my understanding, the gist of his theory is something like this: China has a dual currency system - the Hong Kong Dollar (HKD) and Chinese Yuan (CNY). The first is for reconciling international trade with China, the second is for internal usage. (When you step back and think about it, it does seem unusual. Why does a country, that desires to be the world hegemon, not encourage their currency to be primary on the world stage?) Deep Throat proposes that the dual currency system is currently being manipulated to conjure boomerang US dollars, used to purchase western assets. I.e., when a payment is made to China for goods, one copy of that payment boomerangs from HKD back into USD, and another copy goes into CNY for internal use. He claims that there is evidence that the CCP has used these dollars to purchase in excess of $30,000,000,000,000 of western assets. That is $30 trillion. That would be an order of magnitude higher than most estimates. If you spend a few hours and deep dive some of his key posts, you will find the rationale for his thinking. Here are just a few of the posts that stood out to me, in chronological order: https://deep-throat-ipo.blogspot.com/2015/04/chinas-dreamdefying-financial-gravity.html https://deep-throat-ipo.blogspot.com/2016/09/faking-it.html https://deep-throat-ipo.blogspot.com/2016/10/cheap-reading-glasses-handbagsand.html https://deep-throat-ipo.blogspot.com/2018/04/the-new-phone-books-herethe-new-phone.html https://deep-throat-ipo.blogspot.com/2019/02/dalios-big-debt-crisisthe-fsb-report.html https://deep-throat-ipo.blogspot.com/2019/03/a-modest-proposal.html https://deep-throat-ipo.blogspot.com/2019/05/our-inevitable-monetary-journey.html When you read the blog, it is clear that his thinking evolves over time as to 'why' this is happening - he doesn't really know what the end game is. But he provides very compelling evidence that it 'is' happening. So the $30,000,000,000,000 question here: is this really possible? He does not reconcile the other end of the issuance nor the actual losses within the Chinese system - i.e. that the unprofitable money losing operations that are the 40% that SOEs occupy in GDP are responsible for nearly 200% of Debt/GDP now, double in proportion to his numbers from 2014. The other side is imports. Immediate and through futures contracts. The bulk of the money went to real estate transactions first in HK then all over the world. The numbers are staggering but don't add up to $30 Trillion on the asset side. Half of it is cumulative imports, which is actually something that does not accumulate. A small portion of it is offshore debt service. That also does not accumulate an asset. It is no surprise that endless amounts of real estate were purchased by Chinese buyers in major cities and regions, including NZ, Australia, all of EU major cities, London, NYC, Vancouver California and Seattle. The assets in China continued to grow. M2 is $30 Trillion last year, who knows how much now. Provincial and municipal SIV investment is off the books (only the bank portion of this issuance is reported by the PBOC). The rest is largely hidden within unreported shadow banking wealth management products held by the public at appx. 200% of GDP. It used to finance the private economy. 2016-17 saw a gigantic increase in this avenue of finance as provinces sought to finance their infrastructure projects as dictated by the CCP. While real estate developer sales of land were 40% of provincial income when that accounting at "deep throat" was done, it is 70-90% of provincial income by end 2018. But sales are not panning out as planned. https://www.caixinglobal.com/2019-12-19/459-real-estate-bankruptcy-filings-raise-concerns-of-homebuyers-losing-out-101496055.html https://www.ft.com/content/5dee61e8-0c2b-11ea-bb52-34c8d9dc6d84 China is financially bigger than the entire Western world, US+EU put together. It is coming off the apex of the largest historical credit and real estate bubble ever produced. Its relative size to the economy is greater than that of Japan of the late 1980s. But while in Japan much of the bubble was concentrated in older buildings that did not siphon off that much real consumption, China's bubble is concentrated in new buildings that extracted huge portions of the country's output to construct but stand at huge levels of vacancy. It should be noted that much of China's net exports are capital escaping China, where the proceeds never come back and the suppliers are not paid. That the business owners leave along with their exports and families and do not return, often right after having taken out large loans secured by local China real estate (residential industrial and office) used to fund the export manufacturing runs. Those are not paid either. 3 Quote Share this post Link to post Share on other sites
0R0 + 6,251 April 19, 2020 5 hours ago, TooSteep said: During the postmortem of a financial crisis (or an accounting fraud), it is easy to sit back and say 'How did we miss that?'. All the red flags, discrepancies, numbers that don't quite add up and warning signs become clear as day post facto. It is suddenly obvious that the reason nobody else had ever had success quite like this before is because the success was built on a fraud. And the questions we should have been asking become clear as day. What are the questions we should ask to understand whether or not a banking system plays by the same rules as the FED, ECB, SNB and BOJ? It has always seemed odd to me that when there is a discussion of centrally managed economies and socialism, everyone brings up Venezuela and nods approvingly that 'of course' it is a terrible system, destined to fail and bring about economic ruin to all citizens. Nobody questions the paradox: How is it, when a western country overextends itself a bit, just 5% really - for example when the USA decided to go from 64% to 69% home ownership rate from 1995-2005 - all hell breaks loose and a global financial crisis is born; but when a centrally managed economy spends 50% of GDP a year on infrastructure for well over two decades, while growing between 8-12% annually, the perpetually pending debt crisis of their massive debt-driven growth never actually materializes? No other country ever got away with more than about 20% annually in infrastructure. How is it that the country with a centrally managed economy is able to finance an unlimited number of railway lines, roads, airports, ports and other infrastructure in Africa, South America, Asia and now Europe - cheerily financing the entire projects as developing nations become debt-serfs - while the west cannot scrape together 2 nickels to fix its own crumbling infrastructure? How is it that in a matter of years, the centrally managed economy country owns a significant share of the worlds container ships, dry bulk carriers, chemical/petroleum tankers and operates 6 of the worlds 10 largest ports? never experiencing stress at financing such growth in such a short time? How is it that just this one centrally managed economy is able to do such things, while all others ( eg. Venezuela), who have corrupt regimes, but have central bankers playing by western rules, suffer the inevitable horrific consequences of a centrally managed economy? How is it that the mighty capitalistic west, starved for cash, enthusiastically sells off all of its mines to the SOEs of the centrally managed economy, who happen to possess unlimited cash to buy all the mines they are offered? How is it that every luxury condo tower in the west - London, New York, Chicago, Sydney, Auckland, Vancouver, Toronto, Zurich, Dallas - has its units purchased, many in cash, by 'businessmen' from the centrally managed economy and nobody ever stops to ask where the money came from? No matter how many units are developed, there is always a new supply of money available for these $1,000,000+ units. How is it that when a massive inflow of money suddenly appears in offshore tax havens, available to buy western bonds and stocks, during a period when the global economy is stumbling along at anemic growth, nobody wonders where the money came from? How is it, when a western city, pick Montreal or Los Angeles, builds some one-off infrastructure for a sporting boondoggle, it suffers negative financial consequences for a generation afterwards; but when a centrally managed economy country does the same, on a much grander scale, there are no financial repercussions? How is it that elite universities in the west are so starved for cash that they open up their precious student openings to foreign students happily willing to pay $80,000 a year for each of their 1,000,000 strong cohort? And the students, coming from a country with a centrally managed economy, don't even blink at the cost? How is it that elites from the country with the centrally managed economy are able to contribute generously to western politicians of all stripes, think-tanks, institutions, and wall-street financiers? Why can nobody else afford to spread so much wealth around? Where did all the money come from? The huge profit margins on cheap plastic trinkets from WalMart were enough to finance the purchase of a large percentage of hard western assets? Really? Why does nobody in the west think to step back and question this? (Perhaps because if you ask the hard questions, some of those conjured dollars might not find their way directly into your pocket?) How is it that no bank in the country with the centrally managed economy ever fails? No debt ever goes unpaid? No financial reckoning ever happens? For over 20 years, hedge funds have been shorting the pending economic collapse, but it never comes. What if the conventional wisdom - that the centrally managed economy is artificially holding down the value of its printing-press outputs, in order to make its exports more competitive with the west - is completely wrong? What if the hard peg is instead, allowing them to operate both sides of a dual currency system? As far as I can tell, the answer to these questions so far has been: It's a miracle! It is essentially what they figured out after the 1996 bank restructuring and Yuan devaluation and consequent 30% inflation was completed. That people will save and buy real estate. Their huge baby boomer cohort saves 50% of their income and then buys real estate with it. First for themselves for investment, then for their children, then for the grandkids. The whole thing is mortgaged heavily. That provides the floor of bank assets. It is also the only reason China's system hasn't collapsed. The flows going into real estate substitute "real assets", i.e. highly inflated real estate, for bank liabilities. So the banks can go on issuing endless credit so long as people continue plowing their savings into additional real estate. The Chinese economy is built on 45% real estate and infrastructure (down from 50%) and their expansion has been the driver of Chinese finance and economy since their actual export economy crashed in the aftermath of the financial crisis. Which was entirely of China's creation as they attempted to vendor finance the consumption of their overbuilt industries by foreign importers while their domestic boomers raised savings into the stratosphere leaving behind piles of unsold everything. The story of 21st century China is the looting of the savings of the biggest generation that ever was anywhere at any time. It is the general embezzlement of an entire country. But China is not all a planned economy, at least it had not been while the export boom and then the private domestic economic boom were sort of going on. The Chinese private economy was a wild west free market of untold growth and wealth creation. They had no access to banking other than mortgages, so shadow banking financed it. By 2016, the SOE banking system was exhausted and had to find new ways of funding SOE and provincial adventures to keep the riff raff employed without getting negative cash flows that can not be hidden in further monetary growth without it leaking into inflation of goods. So they generated a huge credit impulse into the shadow banking system to fund SOE and provincial SIV funding where bans got to offload huge amounts of embarrassingly bad loans onto the direct ownership of the public within wealth or asset management products with high yields (till they stop paying...). In the process they displaced lending into the private economy so that despite growing sales and what looked like the holy grail consumer society, they were losing their funding and margins were upside down just as often as in the black. The capacity of Chinese savers to plow more money into real estate investment was reached a couple of years ago, so everything possible was done to prop up sales and prevent down ticks in real estate prices. Because each drop in market prices of real estate brought millions of investors to the streets. In the meantime, over a decade of exports has been a form of illicit capital flight of assets as explained before; you borrow in HK with mainland real estate for collateral (50%), take the money and run. Or you borrow in China for Yuan (50% + industrial loan = 100% of assets) produce a run of export goods, leave the country, sell the goods abroad, pocket the money, and not pay those that provided you credit, including some suppliers, though the private market is still pretty much cash and carry. That is where the money for those vast global real estate holdings has come from in the last decade. With the huge credit impulse in the aftermath of the CV19 epidemic (much better excuse than others before it) things turn again to real estate to hedge for food price inflation. In reality, in terms of what they do need, i.e. food, real estate prices are falling in "real food" terms by 14% generally, 20% if you are in the Shanghai megalopoiis. You can see the major credit impulses of the past 20 years show up in Shanghai property prices. https://www.inman.com/2020/04/08/as-coronavirus-restrictions-lift-chinas-real-estate-sales-bounce-back/ So all this generational money printing has only managed to increase prices for food, while weighing down on demand for everything else - but real estate. Producer prices remain in a fall, and margins are more compressed with low oil prices then they were with higher oil costs, as demand for final goods is shrinking due to high food expenditures and a slow economic recovery from the bungee jump of the CV19 quarantine. Back to the main issue, the Ponzi scheme will end with a collapse of real estate prices. Had they stopped at Japanese levels of leverage, that would have been an 80% loss. But they went beyond to get to price to income ratios about 20x that of the US real estate bubble peak, and at 2X the level of Tokyo apartments at the peak. China cities occupy 5 of the top 10 in price to Income globally, Shanghai - the biggest city. has a price to income of 41 (Shenzhen is 44, HK tops it off at 47, NYC is at 10.8, Tokyo at 14, Singapore and Paris at 22) The only other places that expensive to live are in currency collapse countries - Caracas, VZ, Damascus, Syria, Tehran, Iran. Second tier cities are far cheaper, but that is no help for the people living there, they need good paying jobs and those are only at the tier 1 cities. So 320 million people go there to live in dorms most of the year, while raising families on the farm or in tier 3 cities. Thus lower tier cities have 20% vacancies and up from there, lowest tier cities at 27% vacancies. https://www.numbeo.com/property-investment/region_rankings.jsp?title=2020®ion=142&displayColumn=-1 So bottom line for the China real estate bubble, where we have gone from Price to income of 20 in 2010 to 41 in 2020 is that the real prices must fall back to earth, taking with them the equity of the banking system and most of the wealth of the population. Government income is composed predominantly of land sales to land developers, a drop in real estate prices would cut Beijing's revenues entirely, as the main provinces derive 70% or more of their revenue from land sales and they would not be able to pass anything to Beijing in the event of a cessation of the credit bubble and its mirror in real estate prices. 1 Quote Share this post Link to post Share on other sites
Douglas Buckland + 6,308 April 19, 2020 There is also the Chinese Offshore Yuan and the Renminbi. So four currencies in use in China: Yuan Offshore Yuan Hong Kong Dollar Renminbi seems odd .... Quote Share this post Link to post Share on other sites
frankfurter + 562 ff April 19, 2020 9 hours ago, 0R0 said: He does not reconcile the other end of the issuance nor the actual losses within the Chinese system - i.e. that the unprofitable money losing operations that are the 40% that SOEs occupy in GDP are responsible for nearly 200% of Debt/GDP now, double in proportion to his numbers from 2014. The other side is imports. Immediate and through futures contracts. The bulk of the money went to real estate transactions first in HK then all over the world. The numbers are staggering but don't add up to $30 Trillion on the asset side. Half of it is cumulative imports, which is actually something that does not accumulate. A small portion of it is offshore debt service. That also does not accumulate an asset. It is no surprise that endless amounts of real estate were purchased by Chinese buyers in major cities and regions, including NZ, Australia, all of EU major cities, London, NYC, Vancouver California and Seattle. The assets in China continued to grow. M2 is $30 Trillion last year, who knows how much now. Provincial and municipal SIV investment is off the books (only the bank portion of this issuance is reported by the PBOC). The rest is largely hidden within unreported shadow banking wealth management products held by the public at appx. 200% of GDP. It used to finance the private economy. 2016-17 saw a gigantic increase in this avenue of finance as provinces sought to finance their infrastructure projects as dictated by the CCP. While real estate developer sales of land were 40% of provincial income when that accounting at "deep throat" was done, it is 70-90% of provincial income by end 2018. But sales are not panning out as planned. https://www.caixinglobal.com/2019-12-19/459-real-estate-bankruptcy-filings-raise-concerns-of-homebuyers-losing-out-101496055.html https://www.ft.com/content/5dee61e8-0c2b-11ea-bb52-34c8d9dc6d84 China is financially bigger than the entire Western world, US+EU put together. It is coming off the apex of the largest historical credit and real estate bubble ever produced. Its relative size to the economy is greater than that of Japan of the late 1980s. But while in Japan much of the bubble was concentrated in older buildings that did not siphon off that much real consumption, China's bubble is concentrated in new buildings that extracted huge portions of the country's output to construct but stand at huge levels of vacancy. It should be noted that much of China's net exports are capital escaping China, where the proceeds never come back and the suppliers are not paid. That the business owners leave along with their exports and families and do not return, often right after having taken out large loans secured by local China real estate (residential industrial and office) used to fund the export manufacturing runs. Those are not paid either. You are mostly correct. Very large sums of money have been embezzelled privately via a variety of means, flowing thru HK [as in money laundering] mostly via HSBC, and 'deposited' into western accounts and assets. The schemes are very elaborate, very well hidden, and involve top echelons. Prior to President Xi, the flow was nearly rampant. Xi's anti-corruption drive has thrown 500k persons into jails, recovered some of the theft, and stopped the outflow. The total amount is in the $ trillions; an accurate assessment is being attempted, but this will need many years to resolve, if ever. Western banks provided the means for this theft. Western governments provided the safe havens for these criminals. Despite many extradition requests, western govts [USA primarily] refuse to extradite the criminals and return the funds. They have incentive not to: no way the elite want to refund many $trillions. Quote Share this post Link to post Share on other sites
0R0 + 6,251 April 19, 2020 58 minutes ago, Douglas Buckland said: There is also the Chinese Offshore Yuan and the Renminbi. So four currencies in use in China: Yuan Offshore Yuan Hong Kong Dollar Renminbi seems odd .... It is actually a single internal currency and the dollar externally. The HK dollar is largely a HK thing. But lots of the equity capital for the private mainland economy comes from HK, quite a bit of the lending too. The double system does work in a way like he thinks, but it is through the Eurodollar system. China has been bleeding capital since 2013. Exporters have stopped repatriating funds earlier than that, but took opportunities to put in offshore profits when rates were raised in China for a brief year and some while global ZIRP was the rule. Quote Share this post Link to post Share on other sites
0R0 + 6,251 April 19, 2020 (edited) 35 minutes ago, frankfurter said: You are mostly correct. Very large sums of money have been embezzelled privately via a variety of means, flowing thru HK [as in money laundering] mostly via HSBC, and 'deposited' into western accounts and assets. The schemes are very elaborate, very well hidden, and involve top echelons. Prior to President Xi, the flow was nearly rampant. Xi's anti-corruption drive has thrown 500k persons into jails, recovered some of the theft, and stopped the outflow. The total amount is in the $ trillions; an accurate assessment is being attempted, but this will need many years to resolve, if ever. Western banks provided the means for this theft. Western governments provided the safe havens for these criminals. Despite many extradition requests, western govts [USA primarily] refuse to extradite the criminals and return the funds. They have incentive not to: no way the elite want to refund many $trillions. It has not stopped, just that it is Xi and his politburo who are doing it. The people collected in the "anti corruption campaign" were the political leaders and their financiers that could have challenged Xi. Xi and his politburo are the worst of the corrupt. The people finding ways to escape the capital controls are doing themselves and the world a favor. It is the capital controls that are a crime against the Chinese people. There is no corruption involved in borrowing money against your assets and taking it out of the country in any of myriad surreptitious way to get around an illegal capital control scheme, it is not corrupt to default on a secured loan. It is not corrupt not to repatriate export proceeds. Xi is corrupt, and sent 1/2 a million people to prison or worse for doing much less than he and his cronies do daily. You have a deranged belief in the drivel spewing out of the CCP and its leadership. Go get psychological help to deprogram you from the Xi cult. Psychologists are available to work with you online. The official party line from the ministry of propaganda is leaked out with all its updates, translated to all languages in the world, and serves as a guide for humanity as to what the lies are. If somebody cares, then they know to check on your content to know that it is inverted. So long as you follow the ministry of propaganda guidelines, we know to identify your content as lies and obfuscation. Do your country a favor and dump a communist leader out a window. Collect what information you can find on their lies and cover ups, and publish it to the world. Edited April 19, 2020 by 0R0 Quote Share this post Link to post Share on other sites
frankfurter + 562 ff April 19, 2020 1 hour ago, 0R0 said: It has not stopped, just that it is Xi and his politburo who are doing it. The people collected in the "anti corruption campaign" were the political leaders and their financiers that could have challenged Xi. Xi and his politburo are the worst of the corrupt. The people finding ways to escape the capital controls are doing themselves and the world a favor. It is the capital controls that are a crime against the Chinese people. There is no corruption involved in borrowing money against your assets and taking it out of the country in any of myriad surreptitious way to get around an illegal capital control scheme, it is not corrupt to default on a secured loan. It is not corrupt not to repatriate export proceeds. Xi is corrupt, and sent 1/2 a million people to prison or worse for doing much less than he and his cronies do daily. You have a deranged belief in the drivel spewing out of the CCP and its leadership. Go get psychological help to deprogram you from the Xi cult. Psychologists are available to work with you online. The official party line from the ministry of propaganda is leaked out with all its updates, translated to all languages in the world, and serves as a guide for humanity as to what the lies are. If somebody cares, then they know to check on your content to know that it is inverted. So long as you follow the ministry of propaganda guidelines, we know to identify your content as lies and obfuscation. Do your country a favor and dump a communist leader out a window. Collect what information you can find on their lies and cover ups, and publish it to the world. Frankly, the deranged one here is you. Your hatred has blinded you to the point where you cannot discern legal from illegal. You cannot discuss any issue without resorting to personal smear and attack. You are the sad one in need of help. It's a pity really. I agree with the premise: I should be allowed to do with what I will with MY assets and MY legally begotten profits. You will be surprised when I say I am able to move ANY amount of MY funds outside China, without fear of retribution. But should I be allowed to liquidate/expatriate when the assets are not mine, and profits not mine or illegally begotten? This situation accounts for all of the embezzled funds. I do believe, in the USA, when funds are misappropriated or embezzled, or illegal gains are made, the government does impose restrictions upon their liquidation and will take police and other action against illegal activity. If this is incorrect, please enlighten me. You seem entirely ignorant of the fact your banks will not move more than $100k PERSONALLY without serious due diligence. Try $1mm, and let me know how you get along. Are you aware your govt will not permit any bank anywhere to move more than $50mm at any time for any reason, without approval from the US Treasury? Given a barrel of oil was $45, and the vessels are 2mm bbls, no oil can be transacted without approval. This is true criminal action: pure mafia. If you condone this limitation upon non-US people, why do you oppose far far less limitations by a govt upon its own people? You should look at your own navel before you accuse others of criminal action. The claim that Xi et al are the worst offenders needs to be brought to light. I look forward to seeing your proof. Quote Share this post Link to post Share on other sites
0R0 + 6,251 April 19, 2020 4 hours ago, frankfurter said: You seem entirely ignorant of the fact your banks will not move more than $100k PERSONALLY without serious due diligence. Try $1mm, and let me know how you get along. Are you aware your govt will not permit any bank anywhere to move more than $50mm at any time for any reason, without approval from the US Treasury? Given a barrel of oil was $45, and the vessels are 2mm bbls, no oil can be transacted without approval. This is true criminal action: pure mafia. If you condone this limitation upon non-US people, why do you oppose far far less limitations by a govt upon its own people? You should look at your own navel before you accuse others of criminal action. I have no sympathy for that US position. Given the opportunity, I would knock that off legal code. In some ways, so long as you are not too big, China offers a less regulated freer market than the West does. But there is also little liability to protect the public from abuses. Quote Share this post Link to post Share on other sites
0R0 + 6,251 April 19, 2020 4 hours ago, frankfurter said: But should I be allowed to liquidate/expatriate when the assets are not mine, and profits not mine or illegally begotten? This situation accounts for all of the embezzled funds. I do believe, in the USA, when funds are misappropriated or embezzled, or illegal gains are made, the government does impose restrictions upon their liquidation and will take police and other action against illegal activity. If this is incorrect, please enlighten me. Embezzlement proper is a different issue. But that is not the point, I don't believe these embezzlers prosecuted are any different than the embezzlers who remain in power. The differentiating factor being power, not embezzlement. Quote Share this post Link to post Share on other sites
frankfurter + 562 ff April 19, 2020 https://www.businessinsider.com/fema-paid-bankrupt-company-no-employees-55-million-n95-masks-2020-4?op=1 I suppose you would consider the $55mm not to be a fraud? Not an abuse of power? Far worse than this is occurring now. Who gets the lion share of what will be a $6 trillion 'aid' package? Israel, which runs a fiscal surplus, will still receive its $3bn 'aid' money. Yet, American citizens are truly suffering now. Well, I suppose we have different views on what constitutes abuse, fraud, society, etc. The science of the covid types is irrefutable: and so are the cases. People who do not accept science do so because they wish not to; theirs is the realm of belief. Well, the world has long evolved beyond AD 1616, or so I had thought. Quote Share this post Link to post Share on other sites
Marcin2 + 725 MK April 19, 2020 23 hours ago, TooSteep said: How is it, when a western country overextends itself a bit, just 5% really - for example when the USA decided to go from 64% to 69% home ownership rate from 1995-2005 - all hell breaks loose and a global financial crisis is born; but when a centrally managed economy spends 50% of GDP a year on infrastructure for well over two decades, while growing between 8-12% annually, the perpetually pending debt crisis of their massive debt-driven growth never actually materializes? No other country ever got away with more than about 20% annually in infrastructure. How is it that the country with a centrally managed economy is able to finance an unlimited number of railway lines, roads, airports, ports and other infrastructure in Africa, South America, Asia and now Europe - cheerily financing the entire projects as developing nations become debt-serfs - while the west cannot scrape together 2 nickels to fix its own crumbling infrastructure? How is it that in a matter of years, the centrally managed economy country owns a significant share of the worlds container ships, dry bulk carriers, chemical/petroleum tankers and operates 6 of the worlds 10 largest ports? never experiencing stress at financing such growth in such a short time? There are so many explanations, but the one is crucial: United States is the most corrupt of the G20 states as afar as LEGISLATIVE, HIGH LEVEL CORRUPTION is concerned. You can buy ACT OF CONGRESS through lobbying. This very CANCER on the fabric of your nation is present only in the United States (in the broad daylight at least). Will give you an example: Multinational corporations BOUGHT through CAMPAIGN MONEY, the The Tax Cuts and Jobs Act of 2017 (TCJA) reducing corporate taxes from 35% to 21%, or by $1.5 trillion over 10 years. It was meant to be for investment and job creation, but because it was a usual US Legislative Fraud, nobody included the clause about taxation of dividends and stock buybacks. So out of 1,400 billion of corporate profits in 2018 and 2019 : 800 billion was spent on buybacks. The moment your politicians will stop stealing from you, your economy would probably get better. The problem is that politicians from 2 major parties are used to taking bribes, this is part of your political culture. And you cannot choose anybody from the establishment to Congress because of prohibitive election laws. You know you cannot vote to Congress anybody outside Democractic or Republican Party, so they will take bribes forever. (Disclaimer: Activities analogous to Lobbying in US are in Penal codes of most EU countries, so calling it stealing or taking bribes is justified, for example in Poland it is up to 12 years in prison) 1 Quote Share this post Link to post Share on other sites
SUZNV + 1,197 April 19, 2020 (edited) Can you elaborate more what hold EU countries back in economics and military? Is it Social Security? I think the lobby can be tracked and Trump did issue a lobbying ban so he did try to do something about it. Enough or not is another story. https://www.whitehouse.gov/presidential-actions/executive-order-ethics-commitments-executive-branch-appointees/ Lobbies in daylight is much different from corruptions although both of them are equally bad but at least the lobbies sides have some "transparency". ODA from China are successful in Africa, Vietnam because of their Governments got bribed back from China. If it is ODA from Japan and if a bribe leaked out, Japanese news paper will bring this up, throw the bribers in jail and that shames other governments. Naturally these governments will love doing business with China. I rather to have a lobbying door openly so Japan can join the ODA offers. Politicians are corrupted, that may be why they get so high motivation to pursuit political careers. Trump maybe strive for national hero (maybe US Founding Fathers did as well) or for score his name in History as a weird modern President . You need to turn corrupted politicians against each other, give them less terms or years in offices, more transparency gain when they fight against each other. That is the heart and soul of Democracy. Edited April 19, 2020 by SUZNV Quote Share this post Link to post Share on other sites
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