Credit Bubble Bulletin

Credit Bubble Bulletin2020-05-20T17:01:05-06:00

Presented by Doug Noland

Daily Commentary

Wednesday, September 15, 2021

[Yahoo/Bloomberg] US Steady, Europe Stocks Slip with Treasuries: Markets Wrap

[Yahoo/Bloomberg] China Stocks Battered by Economic Data, Evergrande Non-Payment

[Reuters] Asian stocks stumble as weak China data fan global growth worries

[Yahoo/Bloomberg] China’s Economy Weakens on Delta Outbreak and Wary Consumers

[Yahoo/Bloomberg] China Tells Banks Evergrande Won’t Pay Interest Next Week

[Reuters] China Evergrande’s liquidity crisis deepens, report flags interest payment miss

[Yahoo/Bloomberg] China Property Slowdown Deepens as Evergrande Hurts Outlook

[Reuters] China’s factory, consumer sectors stumble on COVID-19 disruptions

[Reuters] Fitch says possible China Evergrande default may have broader effects

[Reuters] China’s new home prices grow at slowest pace in eight months on cooling measures

[Reuters] Analysis: ECB sees a new inflation ‘hump’ as prices surge

[Reuters] Canada’s annual inflation rate in August hits 4.1%, highest since 2003

[Reuters] UK inflation soars to 9-year high on rebound from restaurant discount scheme

[Yahoo/Bloomberg] Priciest Food Since 1970s Is a Big Challenge for Governments

[Yahoo/Bloomberg] Wall Street Chiefs Meet China Officials Amid Market Turmoil

[Reuters] North and South Korea conduct duelling missile tests as arms race heats up

[Bloomberg] Evergrande Gives China an Impossible Equation to Solve

[WSJ] What’s Your Raise Really Worth? Inflation Has Something to Say About It.

[WSJ] Census Figures Show Americans’ Incomes Fell in 2020

[WSJ] China’s Property Curbs Send Economic Tremors

[WSJ] China Goes Cold Turkey on Property

[WSJ] High Steel Prices Have Manufacturers Scrounging for Supplies

[FT] Chinese land auction blunder undercuts Xi’s inequality crusade

[FT] Chip prices set to rise into next year as TSMC increases rates

[FT] Why Europe fears a gas crunch even before winter demand begins

[FT] Cryptocurrency: rise of decentralised finance sparks ‘dirty money’ fears


Weekly Commentary

September 3, 2021: Easy Money Anesthesia

China’s historic Bubble has been integral to CBB analysis for two decades. I’ve on a weekly basis chronicled how interconnected Chinese and the U.S. Bubbles worked in harmony to inflate one epic global Bubble. Loose U.S. monetary policy and financial conditions were initially instrumental in stoking expansion of Chinese finance and economic output. As for China, it “recycled” massive trade surpluses with the U.S. back into American securities markets, helping sustain U.S. Bubble excess.

It was a symbiotic relationship of far-reaching historical significance. China was desperate for growth and development. The U.S. preferred to deindustrialize – while still enjoying access to cheap manufactured goods (lower CPI, greater monetary accommodation and higher asset prices). Rather than a fledgling competitor, China development was considered a potentially enormous economy determined to adopt free-market capitalism and integrate with the West. They aspired to be like us.

The booming Chinese economy essentially enjoyed unlimited cheap finance. And as dollars flooded in, their ballooning horde of international reserves bolstered China’s pegged currency regime. This stoked “hot money” inflows, while unleashing domestic Credit creation. There were essentially no restraints on Chinese bank lending, as China circumvented the type of currency vulnerability that would typically place constraints on EM Credit Bubble excess.

Bubbles are mechanisms of wealth redistribution and destruction. “Symbiotic relationships” – typified by cooperation and integration – are by their nature transitory phenomena, creatures of the early-Bubble notion of an expanding economic “pie.” Inevitably, late-cycle insecurities and fears of a shrinking pie spur disintegration and conflict.

The prolonged global Bubble period literally inflated China to superpower status, creating rival Bubbles without precedent. The newfound intensity of this rivalry was revealed during the Trump presidency, most conspicuously in fraught trade negotiations. Heated trade talks forced Beijing again to retreat from measures meant to rein in Bubble excess. Understandably, the perception solidified that Beijing wouldn’t dare risk piercing China’s colossal Bubble. The pandemic then incited the most outlandish stimulus measures and system Credit expansion imaginable. (more…)

Load More Posts

Credit Bubble Bulletin – Archives

More Posts