Banks and China

[langdj]

We all know The Federal Reserve (which is neither federal nor a reserve) benefits from making money out of thin are and giving it to themselves through "discount window" etc

What is less obvious is how China fits into this. Sure the West Elites needs an enemy to keep the people afraid and dependent. But I never really quite understand how much the West props up China vs it being a real enemy (I suspect a mixture of both)

This article might shed some light. At least as to how BlackRock views this. BlackRock seems to have overtaken even Goldman Sachs on the hierarchy of banks. Especially since the 2008 crash

https://www.breitbart.com/politics/2021 ... ist-party/

[Yodean]

What is less obvious is how China fits into this. Sure the West Elites needs an enemy to keep the people afraid and dependent. But I never really quite understand how much the West props up China vs it being a real enemy (I suspect a mixture of both)

My current view on this is fairly simplistic and not particularly nuanced: there's 1.4 billion mainland Chinese or so, and a bit of a growing middle-class, and they like to buy stuff, as well as sell stuff to the West. Less taxation for the average Chinese citizen, overall, less monetary regulation for small businesses (not counting the recent property/online education/Chinese Tech. Titan "deleveraging" events, lol). So lots of business for the big banks like BlackRock and Goldman Sachs to get their hands on.

I heard Ray Dalio say in an interview that contrary to most mainstream media potrayal of China, the U.S. and China score the highest (up to this point, at least) of all the major economies globally on overall measures of pure capitalism.

Apparently, those rankings of "economic freedom" published by Western media are mostly bogus.

[Yodean]

Bank of America Corp is planning to file an application to set up a securities firm in China as part of its strategy to expand into the country's burgeoning financial services market.

The lender’s latest move comes a year after China approved rules allowing global banks to operate fully-controlled businesses in the country.

In August, JPMorgan Chase got the green light from Beijing here to become the first foreign owner of a brokerage in China, while in October Goldman Sachs received approval from Chinese regulators to take full control of its mainland securities business.

Western banks have increasingly moved towards China’s expanding capital markets, driven by lucrative underwriting fees on equity and bond transactions. Full ownership of business units will allow banks to expand their operations in the multi-trillion-dollar Chinese financial sector.

In July, China said it would continue to loosen rules here for foreign banks and insurance companies to enter the market in an effort to lure more foreign investment and to shore up its economy.

*****

Here we go ...

[langdj]

It will be interesting to see how much more the media will become pro China now. This "Red Pillled America" podcast walks through how Hollywood and NBA already bent the knee

https://www.iheart.com/podcast/51-red-p ... -88343800/

[symbios]

My current view on this is fairly simplistic and not particularly nuanced: there's 1.4 billion mainland Chinese or so, and a bit of a growing middle-class, and they like to buy stuff, as well as sell stuff to the West. Less taxation for the average Chinese citizen, overall, less monetary regulation for small businesses (not counting the recent property/online education/Chinese Tech. Titan "deleveraging" events, lol). So lots of business for the big banks like BlackRock and Goldman Sachs to get their hands on.

I heard Ray Dalio say in an interview that contrary to most mainstream media potrayal of China, the U.S. and China score the highest (up to this point, at least) of all the major economies globally on overall measures of pure capitalism.

Apparently, those rankings of "economic freedom" published by Western media are mostly bogus.

Couple of things to consider,

1. Numbers coming out of China are usually overweighted. Their system rewards this kind of behavior in their officials and punishes them for underperformance. So the 1.4 billion population might be inflated.. Recent policies shows that the CCP is very concerned on their population growth that they implemented several policies to encourage their people to have more children. Without more young people to replace the old, who is going to serve and generate wealth for the CCP?

2. Their middle class wealth got sucked into properties and other get rich quick schemes. Purchasing power is not as high as what most think. They appear to make a lot of purchases but mainly made in China goods which are inferior in quality and much cheaper because it’s manufactured there.

3. In terms of regulation, most businesses and people in China run with the idea that if the CCP didn’t forbid something publicly, they can do it. CCP regulation can hit anytime, anywhere.. Let’s look at evergrande and other property developers in China, they are selling financial products, building electric cars, piling up tons of debt and paying out huge dividends to the owners. They all grew from small business to this size by piling up debt, taking on tremendous risk and running fast enough hoping that when regulation hits them, they would already be out of the country with their money.

The image of China and how great it is has been carefully crafted over many years. Mass media have been helping them out in the past by reporting China’s “strengths”. Probably to make it easier for Wall Street sales to tell their clients “Give me your money and I will invest it in China and we will grow rich! It’s simply that easy!”

[Yodean]

1. Numbers coming out of China are usually overweighted. Their system rewards this kind of behavior in their officials and punishes them for underperformance. So the 1.4 billion population might be inflated ...

2. Their middle class wealth got sucked into properties and other get rich quick schemes. Purchasing power is not as high as what most think.

3. In terms of regulation, most businesses and people in China run with the idea that if the CCP didn’t forbid something publicly, they can do it. CCP regulation can hit anytime, anywhere..

The image of China and how great it is has been carefully crafted over many years. Mass media have been helping them out in the past by reporting China’s “strengths”.

Thanks for the insights. I am trying to learn as much as I can about the Chinese markets as I don't quite have a good "feel" for them as I would like to have. At the current juncture, somewhat difficult for me to differentiate the real deal from the smoke and mirrors stuff in this sector. Despite being a "Banana" (for those unfamiliar with the term, it means "Yellow on the Outside, White on the Inside") for the most part, I do think I have some insights into how the CCP thinks.

I know about the CCP inflating numbers, as well as the aging demographic and gender imbalance problems that China faces for the foreseeable future. The main question for me is how all of this is going to play out, i.e. is the 21st century really going to be China's century?

I don't think there will be a bonafide, wide-ranging, significant military conflict between the West and the CCP - my sense is that the U.S. military is far superior to China's, a fact which CCP leaders are aware, rhetoric notwithstanding. So the battles will take place in cyberspace, as well as in the business and political arenas. The CCP are fairly patient, generally, and fight best with $$$.

Any thoughts on this graph?

[symbios]

Thanks for the insights. I am trying to learn as much as I can about the Chinese markets as I don't quite have a good "feel" for them as I would like to have. At the current juncture, somewhat difficult for me to differentiate the real deal from the smoke and mirrors stuff in this sector. Despite being a "Banana" (for those unfamiliar with the term, it means "Yellow on the Outside, White on the Inside") for the most part, I do think I have some insights into how the CCP thinks.

I know about the CCP inflating numbers, as well as the aging demographic and gender imbalance problems that China faces for the foreseeable future. The main question for me is how all of this is going to play out, i.e. is the 21st century really going to be China's century?

I don't think there will be a bonafide, wide-ranging, significant military conflict between the West and the CCP - my sense is that the U.S. military is far superior to China's, a fact which CCP leaders are aware, rhetoric notwithstanding. So the battles will take place in cyberspace, as well as in the business and political arenas. The CCP are fairly patient, generally, and fight best with $$$.

Any thoughts on this graph?

Following is my opinion only. Take it with a grain of salt. The trajectory for China was thrown off course. To make sense of China, we have to really look at its leader and the policies they are making. In short, Xi was basically forced to make moves that hurts both his enemies and China at the same time. His political opponents launch attacks against him constantly and he had to retaliate. Hong Kong is his retaliation. Stopping Ant financial’s IPO is his retaliation. However, every move he makes will cost him and China something.

For example, in order to retain his power, he had to rally the people behind him. The weapon he used was anti-corruption. He jailed many of his political opponents with this weapon and as he gained more support from the people, his opponents which is basically the deep state of China hated him even more. They create crisis after crisis for him and he retaliated against them. Basically, the tightening of control of the education, entertainment, financial and tech sectors is sending signals that he is really running out of cards to deal. It hurts his opponents but also hurts the people but he couldn’t care much because he is fighting for his life.

So the man is basically running on thin ice and this causes him to issue unimaginable policies. The recent policies seem to suggest to me that they are running out of US dollars. With trade being disrupted due to trade war and Covid, China is finding it harder and harder to get US dollars. Let’s not forget that China is heavily dependent on importing their food and resources.

So first thing they do is to ban all crypto which effectively plugs a hole for money to flow out of the country. Take back control of Hong Kong which is in effect slowing down the outflows as well. Stop buying from Australia is another sign of stopping outflows. Their USD must be used to buy essentials only. Not Australia wine.. sure.. wine is not an essential but coal is right? It seems that between food and electricity, food is more important. Peoples won’t die without a few hours of electricity or even couple of days of no electricity but without food. They will revolt. I think I will stop here. It won’t be hard to make sense of their unimaginable policies if you continue thinking down this path. One last thing, when they are running out of food and they have to choose to kill the money making cow, they will do it without flinching.. common prosperity they call it..

[Yodean]

Following is my opinion only. Take it with a grain of salt. The trajectory for China was thrown off course. To make sense of China, we have to really look at its leader and the policies they are making. In short, Xi was basically forced to make moves that hurts both his enemies and China at the same time. His political opponents launch attacks against him constantly and he had to retaliate. Hong Kong is his retaliation. Stopping Ant financial’s IPO is his retaliation. However, every move he makes will cost him and China something.

For example, in order to retain his power, he had to rally the people behind him. The weapon he used was anti-corruption. He jailed many of his political opponents with this weapon and as he gained more support from the people, his opponents which is basically the deep state of China hated him even more. They create crisis after crisis for him and he retaliated against them. Basically, the tightening of control of the education, entertainment, financial and tech sectors is sending signals that he is really running out of cards to deal. It hurts his opponents but also hurts the people but he couldn’t care much because he is fighting for his life.

So the man is basically running on thin ice and this causes him to issue unimaginable policies. The recent policies seem to suggest to me that they are running out of US dollars. With trade being disrupted due to trade war and Covid, China is finding it harder and harder to get US dollars. Let’s not forget that China is heavily dependent on importing their food and resources.

So first thing they do is to ban all crypto which effectively plugs a hole for money to flow out of the country. Take back control of Hong Kong which is in effect slowing down the outflows as well. Stop buying from Australia is another sign of stopping outflows. Their USD must be used to buy essentials only. Not Australia wine.. sure.. wine is not an essential but coal is right? It seems that between food and electricity, food is more important. Peoples won’t die without a few hours of electricity or even couple of days of no electricity but without food. They will revolt. I think I will stop here. It won’t be hard to make sense of their unimaginable policies if you continue thinking down this path. One last thing, when we are really running out of food, if we have to kill the money making cow, we will kill it even if it doesn’t make sense for our future…

Thanks. That is quite an excellent post - amazing!

[SOL]

And if Putin finally plays his card correctly, it Russia could be the next mini china. In fact, Russia in terms of brain power and raw materials has the potential to surpass most countries in the world, but stupidity plagues them. Slavs are still to focussed on image instead of opportunity

[SOL]

Following is my opinion only. Take it with a grain of salt. The trajectory for China was thrown off course. To make sense of China, we have to really look at its leader and the policies they are making. In short, Xi was basically forced to make moves that hurts both his enemies and China at the same time. His political opponents launch attacks against him constantly and he had to retaliate. Hong Kong is his retaliation. Stopping Ant financial’s IPO is his retaliation. However, every move he makes will cost him and China something.

For example, in order to retain his power, he had to rally the people behind him. The weapon he used was anti-corruption. He jailed many of his political opponents with this weapon and as he gained more support from the people, his opponents which is basically the deep state of China hated him even more. They create crisis after crisis for him and he retaliated against them. Basically, the tightening of control of the education, entertainment, financial and tech sectors is sending signals that he is really running out of cards to deal. It hurts his opponents but also hurts the people but he couldn’t care much because he is fighting for his life.

So the man is basically running on thin ice and this causes him to issue unimaginable policies. The recent policies seem to suggest to me that they are running out of US dollars. With trade being disrupted due to trade war and Covid, China is finding it harder and harder to get US dollars. Let’s not forget that China is heavily dependent on importing their food and resources.

So first thing they do is to ban all crypto which effectively plugs a hole for money to flow out of the country. Take back control of Hong Kong which is in effect slowing down the outflows as well. Stop buying from Australia is another sign of stopping outflows. Their USD must be used to buy essentials only. Not Australia wine.. sure.. wine is not an essential but coal is right? It seems that between food and electricity, food is more important. Peoples won’t die without a few hours of electricity or even couple of days of no electricity but without food. They will revolt. I think I will stop here. It won’t be hard to make sense of their unimaginable policies if you continue thinking down this path. One last thing, when they are running out of food and they have to choose to kill the money making cow, they will do it without flinching.. common prosperity they call it..

I have to concur with Yodean. Excellent post. When you have time let it fly. Most TI subscribers can deal with non-main stream views. I was in China in 2018 and I have to say the people are extremely hard working. Pound for pound the average businessman stands no chance against the average Chinese merchant but that is a story for another day. CCP appears to be the main focus for now

[AstuteShift]

And if Putin finally plays his card correctly, it Russia could be the next mini china. In fact, Russia in terms of brain power and raw materials has the potential to surpass most countries in the world, but stupidity plagues them. Slavs are still to focussed on image instead of opportunity

Slavs always have potential, for example Nikola Tesla. However that’s true, it’s all about what stuff I have to impress others

[scott]

And if Putin finally plays his card correctly, it Russia could be the next mini china. In fact, Russia in terms of brain power and raw materials has the potential to surpass most countries in the world, but stupidity plagues them. Slavs are still to focussed on image instead of opportunity

IMO Putin's hand is only able to keep oligarchs from each others throats. No small feat in this ossified kleptocracy. Taxes and bureaucracy stifle growth and innovation, most businesses are just buy and sell, much of it in a grey market (already in the USSR, legitimized with it's fall and acceptance of capitalism). Grow too big and get gobbled up. Some call it Rhodesia with nukes, some the worlds gas station. At any rate it will be no small China anytime soon.

[SOL]

And if Putin finally plays his card correctly, it Russia could be the next mini china. In fact, Russia in terms of brain power and raw materials has the potential to surpass most countries in the world, but stupidity plagues them. Slavs are still to focussed on image instead of opportunity

IMO Putin's hand is only able to keep oligarchs from each others throats. No small feat in this ossified kleptocracy. Taxes and bureaucracy stifle growth and innovation, most businesses are just buy and sell, much of it in a grey market. Grow too big and get gobbled up. Some call it Rhodesia with nukes, some the worlds gas station. At any rate it will be no small China anytime soon.

I know Slav's very well. I have some Slavic blood (though very small as my great grandmother was from Russia or USSR) but I have a lot of Slav friends and it's sad to see how Russia waste's its potential. It could be a powerhouse instead its full of shit

[AstuteShift]

And if Putin finally plays his card correctly, it Russia could be the next mini china. In fact, Russia in terms of brain power and raw materials has the potential to surpass most countries in the world, but stupidity plagues them. Slavs are still to focussed on image instead of opportunity

IMO Putin's hand is only able to keep oligarchs from each others throats. No small feat in this ossified kleptocracy. Taxes and bureaucracy stifle growth and innovation, most businesses are just buy and sell, much of it in a grey market. Grow too big and get gobbled up. Some call it Rhodesia with nukes, some the worlds gas station. At any rate it will be no small China anytime soon.

I know Slav's very well. I have some Slavic blood (though very small as my great grandmother was from Russia or USSR) but I have a lot of Slav friends and it's sad to see how Russia waste's its potential. It could be a powerhouse instead its full of shit

As a pure blood Yugoslav, indeed. It’s even sadder how some just refuse to enrich themselves but that’s most of humanity too.