The Coming Crash (no later than 1H2012)?

[Jared Seah]

Hello Kazukirai,

Those who can, emigrate like in Behappyalways links - there are more Greeks outside Greece than in Greece! Chicago and Melbourne have lots of Greeks.

The rich and financially literate will have switched to gold and CHF 2 years ago. Just like rich and financially literate indonesians and mainland chinese buy overseas properties and investments outside their own countries. You never know a new policy may come or another riot...

Those who can't are marching in the streets. But it's a bit sad. If Greece defaults, there are the one will suffer the most. They blame EU, but if EU don't grant another bailout, who will pay the civil servants after Oct 2011? Greece can't print more euros like in US - that's the curse of losing control over your own currency... Kick the next idiot who moots the idea of a common Asean currency!

The strikes are crazy. Even airports and ferries will go on strike. Tourism is the only thing going for them yet the way they treat the tourists.... Imagine you are a tourist and your flight/ferry cancelled. No taxis and public transport... Crazy.... Shooting their own foot...

There's a huge underground economy. But only businessmen and self-employed can tap it. Everything done in cash so it's not on the books - so can escape the taxes. Doctors can declare their annual income are less than 12,000 euros!!!??? We do it in China too. The shops or restaurants will hint that if you pay in cash and don't insist on tax invoice, there will be a discount.

Penalty for tax evasion is lax and only now starts to be tough. Salaried workers are screwed. Taxes are deducted from salary - so no chance to do "magic" or manipulation. Of course can opt to be paid in cash (SG also can but no CPF lor!); but then no social security benefits...

I guess that how our ancestors came to Singapore... Who wants to emigrate unless staying is unbearable?

[Behappyalways]

From The Business Times

China's squeeze on property market nearing 'tipping point'

PRESSURED
A funding squeeze on developers risks a 'domino effect' as companies needing cash cut prices, forcing others to follow, said Credit Suisse
THE SQUEEZE on China's property market may be reaching a 'tipping point' that drives growth lower just when exports are under threat from a global slowdown and investor confidence is plunging, said Zhang Zhiwei, Hong Kong-based chief China economist at Nomura Holdings Inc.

Land transactions in 133 cities tracked by Soufun Holdings Ltd, the country's biggest real-estate website, fell 14 per cent by area in August from a month earlier. Prices of new homes declined in 16 of 70 cities last month compared with July, according to government data.

Property construction is a mainstay of investment that last year drove more than a half of economic growth while land sales contributed 40 per cent of revenues earned by local authorities that have amassed 10.7 trillion yuan (S$2.2 trillion) of debt.

A funding squeeze on developers risks a 'domino effect' as companies needing cash cut prices, forcing others to follow, Credit Suisse Group AG said on Thursday.

The People's Bank of China has raised interest rates five times over the past year, curbed lending to property developers and raised down payments on home loans. The government has also limited purchases of housing in cities where gains have been deemed excessive.

Real-estate development accounted for a fifth of China's urban fixed-asset investment last year, government data show.

Shanghai-based Shui On Land Ltd had a loan approval from a Chinese bank withdrawn after the lender changed its policy, Vincent Lo, the company's billionaire chairman, said in a Sept 13 interview. Cancellations by that bank, which he wouldn't name, are 'happening quite frequently' to other developers, he said, adding that the credit squeeze may slow property development.

The price of land in Beijing slumped 76 per cent in August from a month earlier, while in Guangzhou it plummeted 53 per cent, according to Soufun. Land auction failures surged 242 per cent in the first seven months of this year because of government curbs on the property market, the Beijing Times reported Aug 3.

The decline may make it more difficult for some of the thousands of companies set up by local governments to service debts taken on to fund infrastructure investment. China Real Estate Information Corp, a Shanghai-based property information and consulting firm, estimates 40 per cent of overall local government revenue came from land sales last year.

In a sign that financing vehicles in some provinces are struggling, the auditor of north-east Liaoning province estimated in July that about 85 per cent of such companies in the region had insufficient income last year to cover all their debt servicing payments.

Some developers have turned to trust firms for financing, usually in the form of loans that are repackaged into investment products and sold to retail investors. The debt is typically funded by banks or investors themselves, according to Samsung Securities Asia Ltd.

Many real-estate companies have received about half of their new financing from trust firms over the past year, according to Jinsong Du, an analyst with Credit Suisse in Hong Kong. New bank lending to property developers in the second quarter of this year sank to 42 billion yuan from 169 billion yuan in the first quarter, he said, citing central bank data.

The 'possibility of developers defaulting on debt has definitely increased and towards the end of the year that's pretty likely', Mr Du said in an interview.

Funding problems are just 'the tip of the iceberg' and 'sharp declines in property sales and prices are likely in the next two to three months', said Shen Jianguang, an economist at Mizuho Securities Asia Ltd in Hong Kong.

Premier Wen reiterated this month that stabilising consumer prices remains the government's top priority and that the direction of government policies won't change. The slowdown in economic growth is 'within expectations', he said.

Policymakers may be too complacent about the economy's performance, Mr Shen said, pointing to the deteriorating outlook for exports as Europe's debt crisis deepens and the US risks slipping back into recession.

In signs that China's economy is cooling, a preliminary index of purchasing managers released on Thursday by HSBC and Markit Economics showed manufacturing may shrink for a third month in September, the longest contraction since 2009, as measures of export orders and output decline.

'The risk of China replaying the hard landing of 2008 is increasing as the property sector cools and exports weaken,' Mr Shen said. 'I fear that once the real economy deteriorates and officials do loosen policies, it will already be too late.' -- Bloomberg

http://www.youtube.com/watch?v=mSesAjD3o...re=related

http://www.youtube.com/watch?v=rPILhiTJv7E

[Behappyalways]

An article from The Straits Times

Why China won't play Santa Claus

Andy Mukherjee
The Straits Times
Publication Date : 22-09-2011





In delaying a quick, orderly and credible resolution of the European sovereign-debt crisis, stalwarts of the global financial system are playing with fire.

They risk a repeat of the conflagration three years ago when money markets gummed up following the collapse of Lehman Brothers.

Perhaps these politicians and policymakers underestimate the threat of that happening again. Maybe they expect China again to play Santa Claus, handing out gifts of new business - and income - to workers in Detroit, Dublin, Dusseldorf, Dalian and Delhi, mitigating the world's recession woes.

But Santa's goody bag is nearly empty. Expectations of a large expansion in Chinese government spending or bank credit are wishful thinking at best and dangerous miscalculations at worst.

It was different the last time around. In November 2008, when it became apparent that frozen credit markets would bring trade and commerce to a halt and nudge the global economy into a recession, China announced a 4 trillion yuan (US$621 billion) fiscal stimulus plan.

The stimulus package didn't stem from any deeply altruistic motive. The Chinese Communist Party just could not afford large-scale job losses in the country's export industries to foment social unrest. Hence, it needed to prop up local demand, which it did with beneficial consequences for its neighbours as well as the rest of the world.

A study last year by the Monetary Authority of Singapore's economic policy group shows that if not for the Chinese stimulus, aggregate exports by eight East Asian economies - Hong Kong, South Korea, Taiwan, the Philippines, Singapore, Malaysia, Indonesia and Thailand - might have been 22 per cent lower than they were in the second quarter of 2009. China helped East Asian exports recover fully and surpass their 2007 peak by the end of 2009.

To see why China can't do an encore, one has to look at the relationship between credit growth and gross domestic product. Between 2004 and 2008, the Chinese economy comfortably outpaced the growth in bank loans. As a rule of thumb, when an economy expands faster than the amount of credit running through its veins, the country's banking system piles up fewer bad loans.

So in the fourth quarter of 2008, policymakers in China had a lot of cushion. Not only could they directly boost consumer demand with subsidies, they could also let the financial system gave crazy loans to local governments to build bridges to nowhere, knowing bank balance sheets were fairly healthy.

But it all went out of hand.

In 2009, bank loans grew more than three times as quickly as expansion in economic activity. Last year, the pace of credit growth slowed as China woke up to its emerging inflation challenge. However, it was only this year that the authorities slammed on the brakes and pushed loan growth down to less than half the rate of increase in nominal gross domestic product.

It's payback time for the excesses of 2009 and last year. Local governments owe 8.5 trillion yuan to banks, according to Deutsche Bank's Hong Kong-based economist Michael Spencer.

"If 30 per cent of the banks' loans to local governments were to become non-performing, with the historical record of about a 20 per cent recovery rate on the resolution of non-performing loans, this would imply losses on the order of 5 per cent of GDP," he estimates.

That's US$320 billion (S$400 billion), which equals the total subprime-related write-offs by Citigroup, Royal Bank of Scotland and American International Group.

The scale of the debt problem in China could be even larger than that. Mr Adam Wolfe, a research analyst at Roubini Global Economics, estimates that 9 trillion yuan of investments in China between 2008 and last year were a waste. If the Chinese financial system needs to be shored up by an amount close to Mr Wolfe's estimate, then one is looking at an equivalent of the entire new capital banks and insurers in Europe, North and South America have raised since the subprime crisis.

The government in Beijing has absorbed large banking-sector losses in the past. China spent the equivalent of 22 per cent of its 2005 GDP on restructuring banks between 1998 and 2005. Still, the authorities will not want to compound the current debt overhang: Before the banks are allowed to get dirty again, they will need to get cleaned up first.

Meanwhile, if the global economy slips into recession, China will surely ease its monetary-policy stance. It may also open the fiscal taps a little to support consumer spending. But the authorities can't stimulate the domestic economy by piling up more risk on the balance sheet of the financial system, as they did in the final quarter of 2008 and in 2009.

China won't play Santa again, and there's no other candidate in sight to fill the role. US Federal Reserve chairman Ben Bernanke is trying, but his gifts have so far disappointed.

http://www.asianewsnet.net/home/news.php?id=22028

[Big Toe]

The U.S. has a history of getting things right after things go terribly wrong.
Therefore I have some faith in their economy for the longer term despite all the negativity.

As for Europe, I am not really sure. A lot of the safeguards and legislation passed by the government previously
is now hindering the progress of the austerity measures. I.e. Reducing the govt headcount etc
Also there is too much resistance to the measures and there is not enough political will/public support to make the
measures work. It's a malfunction at a continental level. Well, I do not think it will end up pretty.

[yeokiwi]

As for Europe, I am not really sure. A lot of the safeguards and legislation passed by the government previously
is now hindering the progress of the austerity measures. I.e. Reducing the govt headcount etc
Also there is too much resistance to the measures and there is not enough political will/public support to make the
measures work. It's a malfunction at a continental level. Well, I do not think it will end up pretty.

See how deep is their Euro Brotherly love loh, if it is deep enough, the more hardworking brother should be able to accept their useless brothers as one family.
But, think of it, the more hardworking brothers have also made use of the useless brothers for a decade. Without the useless brothers, the hardworking brothers will be so expensive that they will not be able to sell their products cheap enough to compete in the world.
US complained so much of China tight control of currency exchange rate but did not even raise a voice against Germany and France for unfair competitions.

As a family, they must learn to live and forgive..haha..
I think the dream of Germany to conquer Europe has finally arrived. The southern Europeans will be slaves to their richer brothers finally.Want a Greek maid???

Actually, instead of austerity measures, the PIIGS nations should provide the richer nation free use of land and tax in return for loan. I suppose the free land cost with no corporate tax can easily reduce the manufacturing cost of most Germany's companies
It will also provide jobs to locals.

Of course this is basically similar to China annexing its territories to the western powers in the 19th century.

[newborn1000]

Glad to still see the regulars here.......... =)

[Big Toe]

As for Europe, I am not really sure. A lot of the safeguards and legislation passed by the government previously
is now hindering the progress of the austerity measures. I.e. Reducing the govt headcount etc
Also there is too much resistance to the measures and there is not enough political will/public support to make the
measures work. It's a malfunction at a continental level. Well, I do not think it will end up pretty.

See how deep is their Euro Brotherly love loh, if it is deep enough, the more hardworking brother should be able to accept their useless brothers as one family.
But, think of it, the more hardworking brothers have also made use of the useless brothers for a decade. Without the useless brothers, the hardworking brothers will be so expensive that they will not be able to sell their products cheap enough to compete in the world.
US complained so much of China tight control of currency exchange rate but did not even raise a voice against Germany and France for unfair competitions.

As a family, they must learn to live and forgive..haha..
I think the dream of Germany to conquer Europe has finally arrived. The southern Europeans will be slaves to their richer brothers finally.Want a Greek maid???

Actually, instead of austerity measures, the PIIGS nations should provide the richer nation free use of land and tax in return for loan. I suppose the free land cost with no corporate tax can easily reduce the manufacturing cost of most Germany's companies
It will also provide jobs to locals.

Of course this is basically similar to China annexing its territories to the western powers in the 19th century.

If they can be saved, it would be a good idea to save them.
But some of these countries cant be saved.
The size of greek debt is ridiculous relative to its economy/GDP.

It's like a family in Singapore living in landed property and having a lavish lifestyle when they only earn 1K a month. It doesn't work if the relatives chip in and help pay for a few month's expense. The problem doesn't go away.

[steven]

Do spend 40 mins to check out this video ...

http://w3.newsmax.com/a/aftershockb/vide...ode=C9AE-1

The Aftershock Survival Summit Transcription
http://w3.newsmax.com/a/aftershockb/video.cfm


pdf ebook here
http://joomlaserverhost.com/misctradeboo...ltdown.pdf

[orang]

As for Europe, I am not really sure. A lot of the safeguards and legislation passed by the government previously
is now hindering the progress of the austerity measures. I.e. Reducing the govt headcount etc
Also there is too much resistance to the measures and there is not enough political will/public support to make the
measures work. It's a malfunction at a continental level. Well, I do not think it will end up pretty.

See how deep is their Euro Brotherly love loh, if it is deep enough, the more hardworking brother should be able to accept their useless brothers as one family.
But, think of it, the more hardworking brothers have also made use of the useless brothers for a decade. Without the useless brothers, the hardworking brothers will be so expensive that they will not be able to sell their products cheap enough to compete in the world.
US complained so much of China tight control of currency exchange rate but did not even raise a voice against Germany and France for unfair competitions.

As a family, they must learn to live and forgive..haha..
I think the dream of Germany to conquer Europe has finally arrived. The southern Europeans will be slaves to their richer brothers finally.Want a Greek maid???

Actually, instead of austerity measures, the PIIGS nations should provide the richer nation free use of land and tax in return for loan. I suppose the free land cost with no corporate tax can easily reduce the manufacturing cost of most Germany's companies
It will also provide jobs to locals.

Of course this is basically similar to China annexing its territories to the western powers in the 19th century.

You sure have the knack of putting your finger at the right place
Cheers! ya?

[Behappyalways]

Food For Thoughts : If the banks stop paying the bankers so much bonus and keep the bonus as equity, the banks would be less vulnerable. But the bankers would disagree, bankers should be well paid and anyway, they knew that the banks are too big to failed. They have all the fun(bonus) while the party is in party mood but you are suppose to pick up some of their tab when party is over

Is the euro crumbling?
http://www.bbc.co.uk/news/business-13991135


Q&A: Eurozone rescue proposals
http://www.bbc.co.uk/news/business-15060862


Are we the next Japan?
http://money.cnn.com/2011/09/27/news/int...d=HP_River

(PS: I don't take delight in others' suffering. I don't short the market. I believe what you do will come back to you in a magnified way. But one has be to be updated and prepared for what might be coming)