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wndysrf

The China Bubble

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The Entire Globe, awash in liquidity, hyperextended on an orgy of credit.

 

From today's Wall Struck Journal

 

Liu Yijun is 27 years old and works as a real-estate agent. He and his wife, a supermarket purchasing agent, together make about $8,000 a year. On that modest income, this year they've bought a new Mazda for more than $19,000, and a new apartment priced at almost $91,000.

 

How did they do it?

 

"Bank loans changed our life, " Mr. Liu says.

 

China is awash in easy credit these days, spurring a national spending and investment spree in everything from residential property to wine, card, steel and shopping malls. Banks' liveral lending policies - Mr. Liu and his wife, for instance, financed at rates between 5% and 6%, have boosted lifestyles and help fuel China's white-hot economic growth. Economists estimate that of China's nearly $2 trillion in outstanding loans, between $500 billion and $750 billion aren't expected to be repaid.

 

China's money supply surged 21.6% as of the end of August over the same period last year. Total bank loans outstanding in yuan had risen 16% to $1.85 trillion. For the first 7 months of this year, banks have written more loans than they wrote in the entire year of 2002?

 

Banks have become so eager to lend that they often conduct only minimal credit checks and impose minimal penalties for delinquencies. Mr. Liu's bank failed to learn that he and his wife have a combined monthly income of $664 to cover a monthly debt payment for their new car and apartment of $882. Mr. Liu says he inflated his salary on his loan application and had his employer officially stamp it. Bank officers failed to check further, and they also failed to discover that he had missed a payment on a previous mortgage.

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Twas only yesterday (literally), Crapvision was trumpheting the NEW re-fi boom coming if rates when on a fraction lower and the inevitable goodness that would flow into the stock market. After today, and a fresh memory wipe, we can have two Bullmarkets: One if rates go lower, one if rates go higher. Now that's risk-free investing!

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machine: Nice call on the double top. Here is hoping ( hate that word) that many will see the same and that we gap down on Monday

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machine: Nice call on the double top. Here is hoping ( hate that word) that many will see the same and that we gap down on Monday

More bagholders created today on the long side. This may be it. Time to pull the plug and turn out the lights on all the train chasers. :huh: :o :lol:

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Dec gold futures dropped 20 points in one hour starting at noon EST. Does anyone know the story behind that? Anything official or news related on it?

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The big fact today was that the SPX cash got within 0.98 point of setting a new 12-month high, then closed 10 points below its high. The Dec. spoos opened at 1032, and it looks like they'll close below their open.

 

It's a potential double top. I'll bet brian4 and The End have something to say about it too.

 

p.s. Have a great weekend soup. ;)

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sigma, who did an excellent anyalsis of the employment numbers in LOB, should send said analysis to A. Ableson at Barrons

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Join Doc and Ike Iossif on Marketviews.TV this weak end for an audio panel discussion with three of your fellow stoolies, machinehead, wndysrf, and K Wave Rider.

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The big fact today was that the SPX cash got within 0.98 point of setting a new 12-month high, then closed 10 points below its high. The Dec. spoos opened at 1032, and it looks like they'll close below their open.

 

It's a potential double top. I'll bet brian4 and The End have something to say about it too.

 

p.s. Have a great weekend soup. ?;)

damn straight on the potential for a double TOP. However, A high is not due until Tuesday +- a day. I am perplexed. I did not trade well personaly today. I shorted more at 1036 but covered that position for a slight loss and bought 1 (thank g-d, only one) call. I still own it. :angry: Still have 6 Nov. 1050's though(puts). Wish I had seven. The fly in the ointment is the fact about what the new week brings. Do we close the gap at 1020 and then go up? Do we fall from here into late Oct.?

 

An expanding triangle could still be in play targeting 1050 before we fall.

post-7-1065212575.gif

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The big fact today was that the SPX cash got within 0.98 point of setting a new 12-month high, then closed 10 points below its high. The Dec. spoos opened at 1032, and it looks like they'll close below their open.

 

It's a potential double top. I'll bet brian4 and The End have something to say about it too.

 

p.s. Have a great weekend soup. ;)

This could be the tell. SPX goes no place without the banks.

post-7-1065212632.png

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I am again running a test of the new subscription system. This means that some of you may have a problem accessing the subscription section of the site. I hope not, but.... Please be patient. It's the only way, according to the payment gateway people.

 

You can help out by trying to log in to the Anals. Please let me know if your log-in works, or if it doesn't work. drstool@capitalstool.com

 

This test will be temporary, hopeully not more than an hour. Again, please attempt to log in with your subscriber name and password.

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