The Chinese market has lately traded very poorly. Index is making new lows and underperforming the global markets. We still talk of the Chinese market leading us higher, giving the world the much needed “emerging” growth. Could it be though, the growth in China, is so dependent on the property boom, that a pop in the property sector, could derail the world’s economy? We know what happened in Dubai, US subprime and Spain. Is China next? FT reports;
It was not until the Chinese government decided to privatise much of the country’s urban residential housing stock in 1998 that most people in China had even considered the possibility of owning their own home.
While official figures show 89 per cent home ownership in the cities – a figure disputed by many – analysts say Chinese real estate constitutes the single most important sector for the health of the entire global economy today.
Real estate and housing construction pervade the entire mainland [Chinese] growth model,” says Jonathan Anderson, economist at UBS, the Swiss bank. “They are the most important determinant of commodity demand, a very big marginal driver of China’s external surpluses and indeed a crucial key to real understanding of household balance sheets, saving and investment.”
But when home appliances, property-related infrastructure and other property-dependent sectors are included, as much as two-thirds of total steel consumption in China is broadly driven by property spending.
Below great Interactive map of the increase in property prices in China, by FT;
591,6 per month salary for Greek young workers. This is one of the reasons and logic behind Austerity protests in Greece. Remember, Greece is a country, supposedly part of Europe. Living on 591 Euros a month is not possible in Europe, especially when everything increased in price since the Euro, when corrupt politicians have been filling up private pockets, and definitely not possible accepting the fire sale of the Greek proud History now when state assets are to be sold out at discount prices. Kathimerini reports;
Employers will be able to offer young people monthly salaries of less than 600 euros as part of labor market reforms that the government has agreed with the European Union and the International Monetary Fund, according to sources.
The government is expected to announce several changes to labor laws in the mid-term fiscal plan, which is currently being finalized.
One of these is to allow employers to pay anyone under the age of 25 20 percent below the monthly minimum wage (739.60 euros gross), as set by the national collective contract. This means that those affected will be paid a gross monthly salary of 591.60 euros.
A similar law was passed last year but the Manpower Organization (OAED) covered the difference between the minimum and lower wages. This will no longer be the case.
Among other changes that have been reportedly agreed, fixed-term contracts will now be for up to three years, rather than two. Employers will be able to renew these deals up to three times, thereby keeping employees on fixed-term agreements for up to nine years without having to hire them permanently. If at the end of the nine years, the employee is not kept on, he or she will not receive any redundancy pay.
The government and the troika have also agreed that businesses will be able to ask employees to be flexible in their working hours. An employer will have the right to ask for employees to work for 10 rather than eight hours for up to six months a year, rather than the current four, in return for working six hours for an equal time.
The reforms will apply to the broader public sector as well as the private sector, where many of these measures already apply unofficially.
WHO warns, usage of cell phones may increase risk of cancer. Nokia tumbled some 18% yesterday, and is falling hard today again, another 10%. The company is trading at levels not seen since last millenium. People are soon discounting the death of Nokia. Let’s see if they go bust, or if they manage to do another spectacular turn around, just like they did last time the stock was “bidless”.
The radiofrequency electromagnetic fields generated by cell phones may increase the risk of brain cancer in humans, the World Health Organization’s International Agency for Research on Cancer said Tuesday. In a statement, the agency classified the risk of the fields as “possibly carcinogenic to humans.” “Given the potential consequences for public health of this classification and findings, it is important that additional research be conducted into the long-term, heavy use of mobile phones,” said Christopher Wild, IARC Director, in a statement. “Pending the availability of such information, it is important to take pragmatic measures to reduce exposure such as hands-free devices or texting.
With the European history, different cultures, and religion, it is rather important to understand the history of this continent, before laying out plans of austerity and other measures of how to cure the sick countries of Europe. Below some good insight. Courtesey T. Long.
It was the perception of getting something of value without any meaningful sacrifice that initially fostered the EU Monetary Union. Though the countries of Europe were fiercely nationalistic they were willing to surrender minor sovereign powers only if it was going to prove advantageous to them. They were certainly unwilling to relinquish sufficient sovereignty to create the requisite political union required for its success.
After a decade long trial period it is now time to pay the price for Monetary Union. I suspect that the EU membership is unwilling to do so. Though they likely will see the price as too high to do so, the price to not do so has become even greater. They have unwittingly been trapped by a well crafted strategy.
Never has a monetary union functioned without a political union with which to control Fiscal Policy. This was well understood by the strategists but not the salivating sovereign leaders looking for cheaper money to finance election candy and avoid unpopular, pressing economic realities.
It was expected that the obstacle of political union would inevitably give way when the pre-ordained and unavoidable political crisis forced the issue. We are presently at the cusp of this crisis in Europe. As we just experienced the Arab Spring we are about the experience the European Summer on an unavoidable path to the American Autumn and World Winter in an unfolding “Age of Rage’.
The initial resolution of sovereign debt defaults by the bailouts of Greece, Italy, Ireland, Portugal, Spain (GIIPS) will eventually be the creation of a Eurobond, in my measured opinion. It is the next move on the strategic chessboard being carefully orchestrated.
A Eurobond will allow the ECB to issue debt. With the ability to issue that debt, the obligatory abilities to pay for it will come. Paying for a Eurobond will mean giving up gradually increasing levels of sovereign taxation.
The current political impediment to political union is that never has a ruling political regime been willing to surrender the golden jewels, specifically public taxation. But this will happen because it is the hidden strategic goal now operating in Europe.
To understand the real European Strategy you need to appreciate the history of Europe and its cultural diversity. Ever since the Roman Empire and Charlemagne, leaders have dreamed of a single Europe. No one in modern times from Napoleon to Hitler has been successful.
The one thing the European nations understand and for a time were successful at, was Mercantile Colonialism. They were the ones that invented it. When I say ‘they’, I refer to Kings and their financiers. The Kings may now be gone, but the financiers are even more powerful today than ever before.
The European banks are slowly but surely, through a tactic of Financial Arbitrage, moving more and more sovereign debt to the ECB and EU. Someone must pay for this debt and that will eventually be the entire European taxpayer base. That is the goal.
Arab Spring spreading to Eastern parts of Europe? The crisis (ex the S&P longs) has hit the Economies of Spain, Italy and other European countries. Many migrant workers, have now lost their jobs, and the ability to support the families at home. Could this evolve into something larger, and eventually start big protests in those already suffering countries?
Economic and political tremors from the financial crisis that struck affluent Western Europe are shaking the least prosperous edges of the Continent, raising the pressure on families—and nations—across Eastern Europe and the Balkans and fueling social unrest.
As migrant workers from Europe’s periphery have lost jobs or seen their wages cut amid the downturn, the amount of cash they are sending back has dropped sharply. And jobless rates have soared as those out of work return to communities they had left in search of a better life.
That dislocation is translating into mounting pressure on governments short of money. Demonstrators have taken to the streets this year in Romania, Croatia and Serbia—all affected by slowing remittances—in protests fueled by economic woes. (WSJ)
Ferguson on Austerity. The conclusion, “Obama should visit the Swiss, but he can’t afford it”;
To judge by media coverage, President Obama’s whistle-stop European tour was largely recreational. In Dublin he reenacted the time-honored tradition of discovering his Irish roots. In London he took part in what felt like Royal Wedding: The Sequel.
Meanwhile, in Washington, business went on as usual. The government continued borrowing money despite having breached its legal debt ceiling. Senate Democrats voted down Paul Ryan’s plan to reduce the cost of Medicare, despite having no credible plan of their own to stabilize the debt.
Yet Obama’s travels could have been a timely opportunity to learn from Europe’s fiscal mistakes.
Keep your formulas right. The Economist reports;
FOR Hong Kong’s population, trading in complex financial products rivals a day at the track. Despite the territory’s tiny size, its market for “exchange-traded warrants” is the most active in the world. Last year’s turnover of $534 billion put it far ahead of South Korea and Germany, the next biggest. The instruments give investors the right to buy a security at a fixed price, allowing them to bet on which way a market will move or to arbitrage differences between the warrant and its components.
Almost 14,400 such products were issued in Hong Kong last year by a dozen or so big banks, each with a prospectus the size of a phone book that must be approved by the exchange’s listing committee and incurs a registration fee of HK$100,000 ($13,000). Given the warrants’ complexity, problems can emerge. Few cases will excite moreSchadenfreude than that involving Goldman Sachs.
On February 11th Goldman issued four warrants tied to Japan’s Nikkei index which were described in three separate filings amounting to several hundred pages. Buried in the instructions to determine the settlement price was a formula that read “(Closing Level – Strike Level) x Index Currency Amount x Exchange Rate”. It is Goldman’s contention that rather than multiplying the currency amount by the exchange rate, it should have divided by the exchange rate. Oops.
The CME just announced it is lowering margins on S&P Futures. Great news, now we can definitely go all in long and push the market through the resistance levels. All those long futures Fed has been buying over the last year, are all of a sudden demanding less margin, so they can now buy some more….
Full report; cme31may
It started in Tunsia, spread to Egypt, other MENA countries, Greece, Spain and other places. Will the Arab spring reach China, and eventually the US?
Hillary Clinton doesn’t make mistakes. Let’s place to the side her unhappy 2008 run for the Democratic presidential nomination, during which, as they say, mistakes were made. As secretary of State she rarely makes an unforced error. She does, from time to time, economize the truth, even when speaking about perfectly awful regimes. But she is a diplomat now, and this is a hazard of the vocation.
So when this diplomat, who does not generally make mistakes, and who is proficient in the use of euphemism, speaks bluntly about the failings of a country on which America is disconcertingly dependent, my assumption is that we’re witnessing a deliberate shift in policy.
Not long ago, I interviewed Clinton on the meaning of the so-called Arab Spring. I raised the subject of China, and its own rough and hypersensitive reaction to the threat posed by citizens speaking their minds. Our conversation came shortly after the Chinese arrested many dissidents, most notably the artist Ai Weiwei, who made the mistake of writing a Twitter post about Tunisia’s Jasmine Revolution in February:
“I didn’t care about jasmine at first,” he wrote, “but people who are scared by jasmine sent out information about how harmful jasmine is … which makes me realize that jasmine is what scares them the most.”
Clinton said, in reference to the Chinese leadership: “They’re worried, and they are trying to stop history, which is a fool’s errand. They cannot do it. But they’re going to hold it off as long as possible.”
The Elite can control the masses up to a certain stage, but after a while, when people’s demands get too strong, you end up with a revolution and a regime change.
SNAP welcomes the US food stamp dependent back to ES futures 8 points higher after the Memorial Weekend. Unfortunately, while the Elite enjoyed barbecuing in Newport, some 45 million Americans received food stamps. This is a new record high. With today’s previous articles on Food, this trend looks to only be worsening.
The modern breadline is getting longer and longer. SNAP has released Food Stamp Usage through March 2011, and voila, we have a new record! 44.587 million Americans are now on food stamps (the breadline). There are now an additional 15 million Americans receiving food stamps than the 29 million in 2007 before the financial crisis began.
The Doc would like to know how many of those 44.587 million Americans still have cable TV, cell phones with text and data plans, or smoke 3 packs a day.