Author Archives: Craig Tindale

Chi­nese con­struc­tion keeps trend­ing down with Sany the worlds sixth largest heavy machin­ery mak­er report­ing a rise in prof­it of 5.4% in the same quar­ter as a blow out in receiv­ables of USD $1.39  bil­lion  and cash reserves falling by USD $535 mil­lion  . Sany is clear­ly book­ing prof­its on 100% financed machin­ery while pro­vid­ing zero trans­paren­cy on cred­it risk  and delin­quen­cy . If the GFC has taught the world any­thing. then 100% ‘no mon­ey down” ven­dor finance should ring alarm bells. This all start­ed about about 3 months ago when Zoom­lion start­ed to aggres­sive­ly financ­ing heavy machin­ery for any­one that want­ed to sign up

The Fall of the Com­mu­nist Dynasty and The Loot­ing of Chi­na touched on the wide­spread fraud that has become appar­ent, both in main­land and US list­ed Chi­nese com­pa­nies. I also showed that an extra­or­di­nary num­ber of the Com­mu­nist Par­ty and the mil­i­tary cadre  had mas­sive unex­plained wealth, with the Top 70 record­ing a net col­lec­tive worth of over $80 bil­lion. This week Bloomberg  was banned by the Chi­nese gov­ern­ment for report­ing the incom­ing pres­i­dents fam­i­lies assets at over $367M.

As Xi climbed the Com­mu­nist Par­ty ranks, his extend­ed fam­i­ly expand­ed their busi­ness inter­ests to include min­er­als, real estate and mobile-phone equip­ment, accord­ing to pub­lic doc­u­ments com­piled by Bloomberg.

As I set out in The Fall of the Com­mu­nist Dynasty, and a HT to John Hempton’s piece with­in which he con­tends that the entire Chi­nese econ­o­my is a Klep­toc­ra­cy , this week we have news from Cit­ron Research who reports that  Ever­grande Real Estate Group Ltd is ‘a decep­tion on a grande scale’ .

Cit­ron quote ;-

‘Ever­grande who ranks among the top 5 Chi­nese prop­er­ty com­pa­nies. Our analy­sis and pri­ma­ry research reveal that: 1] Ever­grande is insol­vent; and  2] Ever­grande will be severe­ly chal­lenged from a liq­uid­i­ty per­spec­tive. The Company’s man­age­ment has applied at least 6 account­ing shenani­gans to mask Evergrande’s insol­ven­cy. Our research indi­cates that a total write-­down of RMB 71bn is required and Evergrande’s pro for­ma equi­ty is neg­a­tive 36bn.’

In his recent paper enti­tled A cul­ture of mania: a psy­cho­an­a­lyt­ic view of the incu­ba­tion of the 2008 cred­it cri­sis ,  Pro­fes­sor Mark Stein devel­ops a the­o­ret­i­cal frame­work around the notion of a man­ic cul­ture, com­prised of four aspects: denial; omnipo­tence; tri­umphal­ism; and over-activ­i­ty.

“A series of major rup­tures in cap­i­tal­ist economies were observed and not­ed by those in posi­tions of eco­nom­ic and polit­i­cal lead­er­ship in West­ern soci­eties,” he said. “These rup­tures caused con­sid­er­able anx­i­ety among these lead­ers, but rather than heed­ing the lessons, they respond­ed by man­ic, omnipo­tent and tri­umphant attempts to prove the supe­ri­or­i­ty of their economies.”

John Hemp­ton from Bronte Cap­i­tal expands on the theme of  sys­temic chal­lenges cur­rent­ly fac­ing the Chi­nese econ­o­my that we touched on last week with The End of the Com­mu­nist Dynasty

The Macro­eco­nom­ics of Chi­nese klep­toc­ra­cy Chi­na is a klep­toc­ra­cy of a scale nev­er seen before in human his­to­ry. This post aims to explain how  this wave of theft is financed, what makes it sus­tain­able and what will make it fail. There are sev­er­al Chi­na experts I have chat­ted with – and many of the ideas are not orig­i­nal. The syn­the­sis how­ev­er is mine. Some sources do not want to be quot­ed.

A wild fort­night of tur­bu­lence in the exot­ic world of finan­cial…

AUSTRLIAN/GLOBAL RELATED NEWS LINKS:

Sharp drop for econ­o­my, IMF warns (http://www.theage.com.au/business/sharp-drop-for-economy-imf-warns-20110920–1kjn6.html)

, The Age, 20 Sept

First and fore­most, the IMF has down­grad­ed GDP fore­casts, ‘warn­ing of a new glob­al reces­sion that would hit com­mod­i­ty prices and dri­ve mil­lions world­wide into unem­ploy­ment.’ Now sug­gest­ing growth to be “anaemic” in advance economies (1.6%). ‘How­ev­er, this assumes Euro­pean pol­i­cy­mak­ers con­tain the cri­sis in the euro area periph­ery, that US pol­i­cy­mak­ers strike a judi­cious bal­ance between sup­port for the econ­o­my and medi­um-term fis­cal con­sol­i­da­tion, and that volatil­i­ty in glob­al finan­cial mar­kets does not esca­late’ the fund said.