I hate to say it but it seems that we are getting to the point when it is going to be the inmates who are going to be running the asylum. In Dallas County, Texas, the District Attorney the other day said that they would no longer be prosecuting shoplifting under $750! Yes, you read that correctly….US seven hundred and fifty dollars!! Gone are the days of worrying about someone ripping off a package of gum – in Texas, they think B-I-G!! Don’t just take the package – take the whole damn case!! One presumes that this action (sic) is in response to the Court backlog and the County Jail backlog and the staff backlog and, apparently, the common sense backlog. It reminds me of the time when my passport ‘went missing’ in Guangzhou and I went to file a police report (which one has to do in order to get a replacement). They initially wouldn’t do it, not because they doubted that the event happened, but because the making of a report formalized the event and would be thus reflected on their official figures.
So, if there’s no report, it didn’t officially “happen” – see, China isn’t just exporting products, they are also exporting examples for our feckless bureaucrats to follow. If there aren’t court cases, then there aren’t crimes, and then crime went down and “your DA” accordingly is to be complimented on the “huge reduction” (sic) of crime because of his ‘get tough’ attitude on crime etc. & etc.. Even pigs would throw up eating this swill. Gone are the days when it was, “all the news that’s fit to print” – now it seems that it is more of a case of trying to find the news that’s less unfit. Just saying!
Commerzbank, it appears, will not be merging with Deutsche – apparently, major shareholders of DB were not enthused. Could it be that these same shareholders were not enamored with the tighter controls over money movement in CB and were less than enthusiastic over the prospect that they could/should be adopted throughout the new entity? Far be it for me to say but I guess that there is no need for the CB people to be taking Russian lessons any time soon – just saying!
Mohamed A. El-Erian, in a concise and incisive article dated April 14th/19 for Bloomberg said that, “data….. provided further support for the notion of short-term stabilization in China, but there isn’t yet a convincing longer-term case for higher growth”, and the New York Times on the 19th noted that this same “opening of the bank vaults “stabilizes China’s economy”. The Wall Street Journal on the 17th headlined, “China Growth Beat Expectations Thanks to Humming Factories”. Nikkei, not to be left out, reported on the 27th that, “China stimulus slowly helps companies escape earnings funk”. According to CNBC on April 27/19, “Citi sees a rise in production of home appliances” and feels that this is a good sign for the Chinese economy and Mark Cudmore on April 24th/19 in Bloomberg stated that, “data on household debt supports the theory that any potential doomsday scenario for China’s economy and markets is still a number of years away”. Now aren’t you glad that I had to wade through the 100’s of articles that I did in order to bring you that synopsis instead of you doing it yourself? 🙂
Here’s the thing – there is a severe disconnect between “humming” and “stabilizing”, especially when we are talking about the same scenario. Sorry, but when the government spigots have to be opened and can only produce “stabilization”, the not so far distant horizon looks to be none to rosy, no matter how pink the looking glass lenses are. Yes, it could be that the production of air conditioners etc. is up. How many of those are just going to replace those that wore out (things bought 10 years ago, when the majority of people started buying new residences, need replacement) is not mentioned; nor are the figures for those actually ordered and shipped vs those stated as produced.
China has not the ‘cut and dried’ approach to official figures that we expect from a responsible economy. It’s more like the guy going into his accountant at tax time and saying, “How much do I show as profit?” and the accountant answering, “How much do you want to show as profit?”. If Beijing states that they expect to show 6.2% increase over last year, then every provincial, county, city, and village bureaucrat is going to rack their brains trying to make it happen. But, and it’s big BUT, if Xi says that people should only own 1 residence but smaller localities have no real opportunity other than to develop land, then they will find a way to relax the rules on multiple ownership or ownership of houses on ‘protected’ land (all of which is happening). So the increase reported by the Financial Times on April 16/19 as, “signals economic rebound”, is actually something else uniquely Chinese but really no different than people in the West shoving their money into/onto the stock market because they feel that they have no other place to put it and still show a profit. But the bottom line is that, as The Wall Street Journal reported on April 23/19, “China’s banks are running out of dollars”. And now you know why your payments into China ‘arrive’ at the Bank of China on time but don’t get released for multiple days – they are kiting the dollars. If you or I did it, we would go to jail. If they do it, everyone says that the economy is “stabilized” or “humming”. I get so confused when I cannot remember the code ROD…you know ROD – Rhetoric of the Day. And despite the dangers of seemingly unfettered issuance of bonds at the local level and the stated goal by Xi Jinping to rein this in, Xinhua on April 16th/19 reported that, “local governments step up (my bold font) bond issuance to finance major projects”. Can’t you just feel the diligence?
Chinese officialdom brings the advent of China-bashing down on their own heads with the publication of all their wonderful figures —-“hahaha, you are worrying about slowing economy etc. & etc., but we are far better than you and in only 3 months we have turned everything around…aren’t we the greatest etc.!” The problem is that their figures aren’t true, not even remotely, and even Li Keqiang, the Premier of China, has more than once publicly declaimed the “man-made figures”. But it suits people all over the world to castigate the perfidious yellow man as it detracts attention from their own huge, I mean, “YUGE”, inadequacies. In an article dated April 26th/19, Stephen S. Roach wrote that the US in 2018 had trade deficits with 108 countries. He concluded it by stating, and I am quoting him because he stated it more concisely and clearly than I can, “stress the need for objectivity and honesty in assigning blame”. We cannot say things like, “you can’t believe some/all of the things that Donald Trump says”, as a defense and then insist that every other public figure everywhere else must be held 110% accountable for everything that they say.
The problem is that we in the West have been way too greedy in the pursuit of profit and then we want to blame someone when they take advantage of the advantages that we gave them on a platter. China is not permitted to rent US satellites…so what they have done is create front companies that have done exactly that – but no one ‘knows’ that (wink wink wink$) – WSJ April 24/19 – and those facilitators include Boeing and Carlyle Group. You or I do it and we can expect to get out of jail around the year 2200. They do it, and they keep the profits AND get invited to the White House for dinner and a chance to comment on Melania’s dress. Just saying!
According to Caixin on April 16th/19, attendance at the Guangzhou Fair is down – the figures reported are a decrease of 1.1%. According to Fair attendees, it is a lot worse than that and there were days resembling a “ghost village”. I remember attending a SHOPA Fair in 2001 in Miami and they reported ‘reasonable’ attendance figures. They actually got there (it was just after 9/11) by reporting every turn of the stile as an attendee. So, if you went in and out 20 times over 3 days, you were 20 attendees, your ID badge being clicked notwithstanding! They didn’t last long after that.
The public statement by the Chinese Government’s Wang Yi on April 19th/19 that governments should, “Cooperate or stop criticizing”, vis-à-vis the China Belt and Road indicates a certain level of frustration with the fact that people (rightfully) are not just taking their word for anything….people look at what happened to Ethiopia as a case in point. If the client (Myanmar, Pakistan, Sri Lanka, Djibouti etc.) is a client/partner as China’s pitch promotes, then the client (who, after all, is ultimately paying) has a right to question and, indeed, criticize where presumed warranted. The answer of essentially, “shut the eff up and pay when we tell you to” is not going to go over big as the Chinese found out all too bluntly in Malaysia (where they just cut the cost 25% – but what’s a mere US$5 billion between ‘friends’).
One more item in the April 16th/19 news – it was a big day – Financial Times reported that Huawei stated that they had no commercial 5G contracts in Mainland China. This is the same Huawei who isn’t ‘owned’ by the Government of China and never dealt with Iran and wouldn’t reveal confidential information to the Government of China etc. & etc.. This is semantics eg: is the Bureau of Security a separate entity or is it ‘the government’? One thing for sure, they can say all they like, as they did in the article, that they don’t have any Mainland Chinese “contracts” but they did not open 5G in almost 40 Chinese cities just out of love. Let’s call it, “an understanding”. 🙂
Finally, there are many of us who remember SARS and the devastation and panic, not to mention heartache. I have maintained that the Chinese Government in Beijing did not know about it until long after it started as the leaders were kept in ignorance by their underlings until it could not be hidden any longer. When they learned about it, they acted quickly and decisively. But now, with swine flu sweeping across China and literally wiping out herd after herd, where is the decisiveness; what is being done other than digging deeper and deeper holes to bury more and more of the animals. Well, people, if you eat kosher you don’t have to worry about it – just saying! Imagine if this were a pandemic affecting humans? Just afraid to say!
Have a good week.