Archive for the ‘Canada’ Category
This coming week will be important indicator of the intensity of China’s slowdown. Equity markets have been slow to factor in a Chinese slowdown and have yet to factor in any hard landing.
“Over the next 10 days we will see further company reports and critical economic data and we will be keeping a close eye on the figures.” Wylie highlights weakening commodity and a disappointing corporate reporting season as posing a risk to global market expectations.
To read more visit www.investmenteurope.net
China’s economic slowdown is accelerating quite quickly. Leading indicators are predicting a much harder landing and oppose the conventional wisdom of a soft landing. Natural resource based economies are particularly vulnerable to any China slowdown.
China’s demand for copper fell by 12% between December 2011 and February, according to Reuters. Part of this fall can be attributed to the fact that exports of copper to China were too high. Shipments of refined copper reached a record high of 406,937 tons in December. That could account for a lot of the glut of the metal on the Shanghai market.
To read more visit www.seekingalpha.com
Canada’s herd mentality for home ownership and debt has left our real estate market and econcomoy its most vulnerable in 30+ years. Expect Jim Flaherty to announce further restrictions at the end of March to CMHC backed mortgages, another long overdue correction to his 40 year 0 down fiaco that caused this mess.
Overvalued housing markets in several Canadian cities and high household debt poses a “clear and present danger” to Canada’s economy, TD Bank warned in a report Friday.
To read more visit www.cbc.ca
Hussman takes on Wall Street insanity and horrific governmental interventionist policies.
Read More Click Here Dec 4, 2011 Have We Avoided A Recession?
Frankly, I am concerned that Wall Street is becoming little more than a glorified crack house. Day after day, the sole focus of Wall Street is on more sugar, stronger sugar, Big Bazookas of sugar, unlimited sugar, and anything that will get somebody to deliver the sugar faster. This is like offering a lollipop to quiet down a 2-year old throwing a tantrum, and expecting that the result will be fewer tantrums.
What we have increasingly observed over the past decade is nothing but the gradual destruction of the ability of the financial markets to allocate capital for the benefit of future growth. By preventing the natural discipline of the markets to impose losses on poor stewards of capital, and to impose interest rates high enough to force debtors to allocate the capital usefully, the world’s policy makers are increasingly wrecking the prospects for long-term economic growth. The world’s standard of living (what we can consume for the work we do) is intimately tied to its productivity (what we can produce for the work we do). That productivity requires our scarce savings to be allocated to productive physical capital, and to productive human capital (primarily education).
Nietzsche famously said “What does not kill me makes me stronger.” The corollary is “What constantly rescues me makes me weaker.” The world will only stop looking for bailouts when policy makers stop handing them out.
Wall Street’s pattern of dependency foreshadows the inevitable. Between China’s real estate bubble, Japan’s debt and European bankrupt nations the writing is on the wall. The silver lining is that mankind is much more resilient than our leaders give us credit. The recovery can begin as soon as we allow markets instead of bureaucrats to allocate capital.
China’s massive real estate and unregulated credit bubbles are in the process of deflating. I do not expect China to reach a bottom for many years as the bad debt and misallocated resources work their ways through the system. The havoc they will bring to the global economy will be prominently felt in natural resource based economies such as Canada and Australia. Given Canadian housing prices and debt levels, Canadians can expect to catch up to the US in economic pain.
“House prices have increased by about 10-fold in the past decade in cities like Shanghai and Beijing. How come the property market cannot withstand a 30% housing price drop now?” Yi asked.
To read the more visit:www.atimes.com
Ordos, possilby the worst ghost city in the Chinese real estate bubble, can be considered a leading indicator of things to come in other cities. Real estate sales have plummeted and prices appaer to be crashing. The boom-to-bust has exposed the rampant black market lending as debtors feel threatened by creditors.
To avoid facing creditors’ ravage, debtors have taken to deliberatly going to jail for protection. According to The Australian, Chinese debtors are opting for impaired driving charges.
Few would opt willingly for the bleak interior of a Chinese prison but, for a growing number of debtors in Ordos, these are desperate times. A frenzy of black-market lending, speculative property investment, Ponzi schemes and fraud has begun to spray toxicity everywhere.
To read more visit: www.theaustralian.com
