China's Next Tipping Point - Tighter Capital Requirements?
We were really a lone voice of reason with numerous warnings of impending doom when China's economy was melting upward before the collapse in 2007. And we wrote of China's attempt to control that upward overheating by manipulating its fragile banking system. In fact one of our Death Watch China posts highlighting China's frantic attempt to gain control of their economy was put up within weeks of the actual top in the Shanghai Index. The index then dropped about 73%. That is not to say we picked the top. That is to say China's efforts to reign in their overheated economy ultimately contributed to the collapse of the Shanghai Index.
Just as the Chinese economy appears to be showing signs of trouble again one famous barker, mostly famous for losing as much as he makes, is now goading anyone bearish on China. Conversely, anyone reading the remarks on this blog would not have lost a single cent in the China or commodities or banking collapsing.
China's new attempts to reign in the banks could very well put the final nail in China's economy and with it, start the early process of taking down its banking system. That is, if the communists truly enforce their plans to tighten capital requirements. Eventually this shall happen regardless but in 2009 we have heard countless conflicting remarks from different party officials.
We'll end with a final remark as it pertains to global financial markets and China. What we see today is that most global markets are trading off of China's markets using government-provided liquidity. Many in the market are back to talking about sentiment, short ratios and other tools which gamblers often used to divine the future of our financial monster. These are games that only work when the markets are adequately liquidifed. These data points failed in 2008 and we wrote they would fail years before. So why do I mention this? Well, let's revisit a comment I made on here well before the world financial markets collapsed. That is, Wall Street will push any market as far as they can for as long as they can. And how do they know if they are right or wrong? Only if and when something breaks. And that is what happened in the last financial market collapse. All was wonderful just months before. Even though the seeds of collapse have been building for years. In other words, divining the future of this crisis will not be accomplished by embracing more financial lunacy.
Most financial and business professionals are again embracing mistruths similar to those held before the 2007 and 2008 collapses in various markets. There is a lot yet to break in the global economy. And we are most certainly not through with liquidity shocks in the global financial Frankenstein that elitists are so sure they have saved.
Party hard! Of course, always do so with someone else's money.
Just as the Chinese economy appears to be showing signs of trouble again one famous barker, mostly famous for losing as much as he makes, is now goading anyone bearish on China. Conversely, anyone reading the remarks on this blog would not have lost a single cent in the China or commodities or banking collapsing.
China's new attempts to reign in the banks could very well put the final nail in China's economy and with it, start the early process of taking down its banking system. That is, if the communists truly enforce their plans to tighten capital requirements. Eventually this shall happen regardless but in 2009 we have heard countless conflicting remarks from different party officials.
We'll end with a final remark as it pertains to global financial markets and China. What we see today is that most global markets are trading off of China's markets using government-provided liquidity. Many in the market are back to talking about sentiment, short ratios and other tools which gamblers often used to divine the future of our financial monster. These are games that only work when the markets are adequately liquidifed. These data points failed in 2008 and we wrote they would fail years before. So why do I mention this? Well, let's revisit a comment I made on here well before the world financial markets collapsed. That is, Wall Street will push any market as far as they can for as long as they can. And how do they know if they are right or wrong? Only if and when something breaks. And that is what happened in the last financial market collapse. All was wonderful just months before. Even though the seeds of collapse have been building for years. In other words, divining the future of this crisis will not be accomplished by embracing more financial lunacy.
Most financial and business professionals are again embracing mistruths similar to those held before the 2007 and 2008 collapses in various markets. There is a lot yet to break in the global economy. And we are most certainly not through with liquidity shocks in the global financial Frankenstein that elitists are so sure they have saved.
Party hard! Of course, always do so with someone else's money.
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