If I Wanted Europe and Democracy to Fail...

[karlox]

China may face a subprime-crisis up to 140,000 billion euros according to Spain´s economy magazine Expansion. How could this affect both US and Europe? Your opinion, please. Mind Google Translator for following from original article:
quote
The Chinese have funded trusts 140,000 million in subprime and CITIC financial group BBVA partner, has been the first to say it could not return the money to its customers. You can reedit the 'subprime crisis' in the second world economy.
Municipal governments received those credits to build bridges and roads. Supposedly, paid with the income they would generate this infrastructure once it had finished. The reality however is that, according to HSBC's China economist Donna Kwok, half of the debt that local governments have obtained due this year and "60% of infrastructure projects are built not finish before next five years. " In other words, they will not be able to repay the money on time.
Xiao Gang, chairman of Bank of China, asked in a letter published in the official press institutions evaluasen the enormous damage that could cause this discrepancy between debt maturity and the end of the works, which affects about 140,000 million euros as the online edition of 'Caixin'.
This will not surprise most of customers who deposited their savings in the trusts. In China it is considered that the central government is responsible for local government and that banks typically provide loans, to be public, bow to Beijing's orders. The risk is theoretically zero. Or had been.
CITIC, the largest national marketer and asset trusts BBVA partner, has announced that it is willing to cover the losses this time and which will simply sue governments that do not comply with the agreement. This means that unless there is a massive refinancing, savers would be left with virtually nothing.
Serious consequences
But the consequences go beyond a gap of 140,000 million in the accounts of hundreds of clients. According to Kwok, "if not carried out a refinancing of these products and investor confidence suffers them?? can disrupt the flow of credit. "
Investment in infrastructure, primarily oiled debt represents 50% of the Chinese economy. In fact, both HSBC and the World Bank consider that much of the growth of the Asian giant in 2013 depends on maintaining the pace of investment.
Local governments have little room to refinance and pay even less for what they paid in a timely manner. Specifically, according to the official Xinhua news agency debt has reached $ 1.6 trillion and has become "a time bomb." The reason I turned to the trusts was precisely the growing distrust of banks and prohibition, with rare exceptions, to issue bonds.
For Kwok, the bankruptcy of local governments is virtually ruled out. Most likely, he says, is that local governments "extend their maturities, allowing them to issue bonds or having to sell assets." Beijing has shown this week that will not let them fall by announcing a plan of 19,000 million for build highways and country roads and accelerated approval of infrastructure projects in the last five months.
unquote

www.expansion.com/2013/02/12/empr....a7&t=1360765592

[nautonnier]

""For Kwok, the bankruptcy of local governments is virtually ruled out. Most likely, he says, is that local governments "extend their maturities, allowing them to issue bonds or having to sell assets." Beijing has shown this week that will not let them fall by announcing a plan of 19,000 million for build highways and country roads and accelerated approval of infrastructure projects in the last five months.""

That sounds worryingly familiar to the stimulus we have seen tried and failed elsewhere.
Perhaps they could build towns and airports - with nobody in them like Spain - nope they've done that already.
Perhaps they could build roads and bridges to nowhere like the US - nope they are doing that already

I wonder if like the US Federal government and the EC they will insist on a sign by the building sites - "building funded by Beijing"?

[karlox]

Feb 13, 2013 14:43:51 GMT nautonnier said:

""For Kwok, the bankruptcy of local governments is virtually ruled out. Most likely, he says, is that local governments "extend their maturities, allowing them to issue bonds or having to sell assets." Beijing has shown this week that will not let them fall by announcing a plan of 19,000 million for build highways and country roads and accelerated approval of infrastructure projects in the last five months.""

That sounds worryingly familiar to the stimulus we have seen tried and failed elsewhere.
Perhaps they could build towns and airports - with nobody in them like Spain - nope they've done that already.
Perhaps they could build roads and bridges to nowhere like the US - nope they are doing that already

I wonder if like the US Federal government and the EC they will insist on a sign by the building sites - "building funded by Beijing"?

Chinese people -talking about the incipient middle-class- get nearly nothing for their savings. Chinese culture prevents families for long-term mortgages, so they´d rather save and pay cash... that´s what comes from their traditional conservative culture: saving while in good years for compensating future possibles loses. So what their State Corporate Boards of Directors is mainly doing is using people´s savings for financing ´round the world chinese corporate investments. On the other hand they badly misuse their ressources for GROWTH by-all-means is their only Bible and motto (will rearrange things always next in the future, once they figure it out how to make also money from that)
Interesting times...

[karlox]

By its interest for discussion on what European Central Bank is doing I copy translation below of a post from a United Left Deputy upon Mario´s Draghi speech before Spanish Court or parliament.

8 large Draghi lies in the Congress of Deputies
Posted by Eduardo Garzón on 13 February,

Yesterday, Tuesday 12 February 2013, the president of the European Central Bank (ECB), Mario Draghi, appeared in the Spanish Parliament to explain the actions of the ECB in the Eurozone. Leaving aside what is shameful and undemocratic that the hearing be closed (and how absurd it was, because then published the speech on the Internet), I can not resist here denounce the lies, half truths and fallacies Draghi used during his sermon. Because if he wanted to comment on all need to write a book, what I will do is focus on those that are most abhorrent and shameful.

1. Our measures have eased restrictions on financing for entities that choose to renew or expand their lending to businesses and households, thus removing an obstacle to growth.

Absolutely false. The ECB has not given money to the banks to lend it to businesses and families, but to plug their gaping holes. In fact, today the Spanish banks give less credit than ever in recent history. Moreover, Spain is a global queue of access to credit as the World Economic Forum. How can Mr. Draghi lie so blatantly and get away? Why journalists repeat their speech without questioning the veracity of his words?

2. The first key element has been to reduce our official interest rate to 0.75%, a record in virtually all countries of the euro area.

He forgets to mention that the official interest rate in the U.S. is much lower, particularly at 0.25%, that of Japan is at 0.1%, or that the UK is at 0.5% , among others.

3. In particular, the difficulties arising from the large imbalances in highly indebted poor sanitation of public finances in some euro area countries.

That is, for Draghi to blame for the crisis in Europe have sectors that have borrowed and governments have spent more than they have admitted. In this regard, you have to tell a few things Draghi.

First, in the most indebted Spain have been the great fortunes and big business, blinded by a desire for profits obtained through exorbitant speculation with financial leverage. In contrast, most of the less wealthy families who borrowed did so to buy a home of first residence (which is a right enshrined in our Constitution) required by low wages and high housing prices. And yet, the very wealthy and big business are being affected not by forcing cuts in the ECB, but the opposite: Spanish millionaires are swelling their fortunes during the crisis (in some cases have increased 50%), and the benefits of the 35 largest companies listed on the Spanish Stock Exchange does not stop growing (ten of them in 2012 have broken their record profits). Therefore, those who are paying the price are different: most of the population barely benefited from the housing bubble.

In addition, this high debt was allowed and facilitated by the structure and rules of the European Union, of which the ECB is the main institution responsible for being the monetary authority of the Eurozone. If guilt is debt, and debt is the responsibility of the ECB, Draghi then should blame his own institution of the European crisis, and not indebted sectors.

Furthermore, Draghi blames government for not being sanitized. Well, that of Spain was saneadísima since enjoyed a surplus of 1.9% of GDP in 2007 (starting year of the crisis). And half of all public administrations of the European countries only reached a deficit of -0.7%. If the data show that, how is it possible that the president of the ECB has so little shame to blame public finances? Clearly, this economist is lying so thoroughly prepared. The sad thing is that this is allowed.

4. The countries of the euro area have been reduced by almost half their budget deficits [...]. Excluding interest payments, the primary deficit of the whole euro area was practically zero.

What he is saying is that Draghi, on average, European Union countries have deficits simply because they pay interest have borrowed in the past. If you do not pay interest, would not deficit. And if you pay a lot less interest, would hardly deficit. What is not said is that those interests Draghi would be much smaller if the institution of which he is president, the ECB, fund States rather than private banks to finance these States (thus earning a profit ). That is, in the hand of the ECB was and is the possibility that the European countries have a much lower deficit (and lower risk premium, and less need to cut spending and raise taxes), but I never wanted to do because it prefers to money to private banks to heal their wounds.

5. The current account deficit in Spain has dropped considerably, from nearly 10% of GDP in 2008 to about 1% in 2012.

True, but intentionally forget Draghi explain why this happens. The current account balance is the difference of what it sells abroad Spain with what you buy abroad. During the housing bubble Spain submitted a growing deficit, because buying more quantity of goods and services abroad by selling. Today that gap is narrowing, but not because Spain is selling much abroad, but because now buys much less due to the fall in private consumption of Spanish households (in 2009 imports fell by 27%). That is, the trade deficit is shrinking because we are now much poorer and buy less things to other countries.

6. The share of exports in GDP increased by about 10 percentage points in Spain.

The share of exports in GDP (X / Y) depends on the evolution of exports (X) but also depends on the size of GDP (Y). That is, the indicator may increase because exports increase or decrease because GDP, or both. In the Spanish case it is true that exports have grown, the fall in GDP has highlighted even more, so that the indicator has improved in large part thanks to the Spanish GDP is much lower now than before, and not because exports are increasing.

7. The ECB is actively contributing to a reduced risk of a macroeconomic nature: stabilizing inflation expectations firmly.

That is precisely the problem: the ECB's obsession to control inflation, for which is strangling (consciously) to the European economy. In the U.S. capital injection has been mammoth and lowering the policy rate and inflation has not increased at all. As I explained in a previous article, in times of recession like the current increase in the money supply does not cause inflation.

8. After outlining our performance, I will listen with great interest your views on the European economy, the ECB's policies and the future design of our economic and monetary union.

Even in this lie, because when the United Left deputy Alberto Garzón's vision outlined his parliamentary group on the issue, Draghi replied simply upset with, "what is the question? And he said nothing more. Thus showed he did not care at all anyone's opinion. He had gone to Congress to lecturing, not to debate.
eduardogarzon.net/8-grandes-mentiras-de-draghi-en-el-congreso-de-los-diputados/

[karlox]

Sharing this sunset in Madrid with all of you so we don´t get too serious about nothing unimportant...
www.flickr.com/photos/karloxxx/8471622452/

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[sigurdur]

Karlox:
The sailors will be heaving a sigh of relief with colors as displayed.

Thank you.

[Pooh]

On the topic of Democracy: solarcycle24com.proboards.com/index.cgi?action=gotopost&board=globalwarming&thread=1965&post=87853

[sigurdur]

Pooh:
It seems that the parents of late have abdicated their responsibility in regards to education. A lot of kids/younger adults have no idea what our republic actually is.

Can education be soon enough?

I am beginning to fear that we are past.

[karlox]

From latest post in If I wanted America to fail...:

From my point of view ´democratic´index (¡) of both Europe and USA is dropping quickly. Both in Spain and USA society is much more plural and colourful than what their representatives look like. Sovereignity, both cases, has been kidnapped by finantial and big pressure groups such as Weapon Industry (War Industr)
Yet most people seem not to care...
Belief both cases drastic changes would help society to dare to take a big jump forwards assuming duties and sacrifices if needed by their own sake and future generations.
Most Probably it is our Bi Party System and electoral laws what should be reformed for triggering needed changes.
Most decissions affecting our lives have and are been taken without any possibility of control by you or me as citizens
Power is too unbalanced, Capital is too high and virtual and unreachable and rapid, we give control of our life to our banks (pensions scheme, savings, loans), but have no control of what the loose cargo in our ship is doing. Democracy is mockery nowadays, let´s say it while we keep the right for doing so.

[karlox]

Procesados - Prosecuted
www.flickr.com/photos/karloxxx/8472657587/in/photostream

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[karlox]

DE GUARDIA - ON DUTY
karloxxxx.blogspot.com.es/2013/02/de-guardia-on-duty.html

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[karlox]

EL PAIS. PUBLISHING. Warring currencies. The rise in the euro limits the export, slows economic growth and delays economic recovery.

Among other consequences, the uneven response of economic policies, in particular the monetary, in the management of the crisis is generating competitive advantages of some economies at the expense of others. The most obvious distortion, although not the only one, is the alteration of currency of reference exchange rates. Increasing the amount of money or its excessive cheapening through not only interest rates reductions favours the expansion of demand in the respective economies, but that move financial flows towards those other currencies with higher wages, depreciating exchange rate who practice such policies in both cases.Obviously lax orientation of monetary policy in the United States and more recently in Japan has led to the depreciation of its currency with respect to other currencies, especially those currencies whose authorities have expressed more cautious in the neutralization of the recession. It is the case of the ECB, tolerant with the rise of the euro and therefore adding more difficulties European firms to be sufficiently competitive in a global environment of low demand growth. Also some emerging economies seeking to conduct their economic policies in a rigorous way suffer the consequences of these depreciations of the exchange rate.At the meeting of the G-20, which has just shut down in Moscow has warned about the consequences of the practice of such "competitive devaluations", but has not been adopted binding agreement any. The meeting between the G-7 policymakers Tuesday was also relevant in this regard. Commit to not practice competitive devaluation without close scrutiny of any asymmetries in monetary policies does not resolve the issue. It is necessary that in the eurozone will abandon policies contrary to the stimulation of demand. They make more expensive euro, restrict exports outside the area and slow the recovery of economic growth and employment. An appreciated against major currency exchange rate is an additional way to play down chances of abandoning the European recession. The ECB should at least handle this variable in their reasoning, although formally not be among their obligations.

elpais.com/elpais/2013/02/16/opinion/1361044522_071849.html

[karlox]

EL MUNDO. 17 Feb 2013. Royal House affected by acused testimony.
Torres put the Infanta in the center of the plot of Noos.

" The former partner of the Duke of Palma, Diego Torres, has taken one step further to put the Infanta Cristina in front of the investigation of the Noos case over the alleged detour of about 6.1 million euros of the administrations Balearic and Valencian between 2004 and 2007. In his seven-hour statement in the courts has ensured that the daughter of the King and the Royal family were aware of the activities of the Instituto Nóos because his former partner Iñaki Urdangarin reported them, although the former partner has defended all the actions carried out in this entity were legal.Torres has been shown before Judge José Castro that the husband of the Infanta Cristina used to 'consult' with his wife the activities that were carried out through the Instituto Nóos, apparently without profit, and that, therefore, she was aware of them as all the members of the Board of Directors of that entitywhich was also the Secretary of the infantas, Carlos García Revenga part. 'All did it with the consent of the Royal House,' said emphatically the former Professor of the Esade.Fuentes legal point that Torres has told how Urdangarin realized the daughter of King Juan Carlos of the daily life of the entity apparently non-profit, whose Board of directors included the Princess with her husbandTowers, women of this, Ana María Tejeiro, and the personal Secretary of the Infantas, Carlos García Revenga. Torres has declared that each Member of the Executive Board participated in this Institute on their knowledge.The Prosecutor's Office does not arise at the moment ask for citation of the infanta Cristina neither witnessed nor how imputed on instruction.The lawyer of Urdangarin, Mario Pascual live, has been "convinced", however, that the wife of the Duke "not be liable". Should be recalled that the Balearic Islands Provincial audience already rejected the request of clean hands that the Infanta Cristina was summoned to testify in quality of imputed.During his long hearing, questions the judge José Castro and Prosecutor Pedro Horrach, Torres also referred several times to the Attorney José Manuel Romero, legal adviser of the Royal House and count of Fontao, who recommended to Urdangarin in 2006 that will prevent having a role protagonist in public of the Institute Noos.segun Torres, conde de Fontão activity designed a strategy to Urdangarin not appear publicly in the activities of the Instituto Nóos nor in the Foundation sports, culture and Social integration (Fdcis), who succeeded to that institution.The defense of the exsocio of the Duke of Palma has delivered to the judge e-mails and documents on the management of the Instituto Nóos intending to highlight both the Princess and Garcia Revenga involved in decision-making. Torres has provided some 200 documents, most e-mails and a letter about the business decisions that were taken in Noos and about who was going to make each management, and several of them are Urdangarin asking authorization to Garcia Revenga, in a tone of confidence.Meeting in ZarzuelaEl former member of Urdangarin has also confirmed during his appearance, that has lasted seven hours, the information being conducted by Eduardo Inda and Esteban Urreiztieta on the meeting held in the Zarzuela Urdangarin, Camps and Barbera deciding contracts for the events in Valencia. Castro has asked here if at that meeting were present the King, what Torres has answered that not.The three editions of this Sports Forum, between 2004 and 2006, are among the activities of Noos investigated in this cause by the alleged diversion of public funds.He has also ensured that the defense of Urdangarin offered him money in exchange for his silence, so assume the responsibility for the management of this entity, and to change it would have secured work, his defense and not paid anything missing. In particular, the proposal was made him, according to his testimony, in the Office of his own lawyer, Manuel González Peeters, by the lawyer of Urdangarin, Mario Pascual live, something that this has flatly refused to leave the Court.The intervention of CorinnaPor elsewhere, Torres also said that the Royal House mediated so Urdangarin was hired "with a good salary" by a Foundation he works Corinna Sayn-Wittgenstein, which is attributed to friendship with the King, and has provided an email of the Duke of Palma where he announced noble German that he referred the curriculum, as indicated by his father-in-law. Torres already had provided weeks ago to judge a few e-mails concerning the participation of this woman in one of the sports forums Valencia Summit.Tras Declaration of Torres, has brought his wife, Ana María Tejeiro, who was responsible for the legal and fiscal area of the Instituto Nóos, who said that he was unaware of the activity carried out in that entity.
www.elmundo.es/elmundo/2013/02/16/baleares/1361053164.html

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[karlox]

For any of you that might be interested I´ve created a group in Flickr called: Good Mourning ´S_Pain! and getting more invoved with it. People -not only from Spain- is joining and sharing pics. You can get there through following link:
www.flickr.com/groups/good_mourning_s_pain/
Thanks for visiting our gallery!

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[nautonnier]

A musing of the Chiefio that covers a lot of this ground

"The rest of the global economy is tinker toy sized compared to the EU, USA, Japan, and China. And much of THAT is dependent / derivative. (Australian and Canadian mineral and energy sales to China, for example. Or Latin sales of minerals and oil to the USA.)

So I’m just having a little bit of trouble seeing where anyone is being frugal, living inside their means, has excess money to invest, and has customers paying in something other than evaporating promises. EU is on life support (other than Germany). USA is in debtors prison and maxing out the credit card pronto. Japan is moribund and doing a massive pay cut via devaluation. China depends on all of them to buy stuff and transfer wealth, but there is ever less wealth to transfer and ever more printed paper.

Is it just me? Does anyone else see some hope in all this?"

chiefio.wordpress.com/2013/02/19/dismal-scientist-r-on-dismal-european-numbers/#comment-46827

I think that there is some Fabian somewhere who with others of 'Common Purpose' has choreographed this and who is counting down to give the signal for the entire orchestrated mess to collapse under the Fabian's impression that they will win something if they crash the global economy. If it does all fall over subsistence farmers in sub-Saharan Africa will survive it better than first world city dwellers.