BACKDOC: WELL THUNDER, IT SEEMS THERE IS NO END TO WHAT IS GOING DOWN PRIOR TO MONDAY!
THE IMF CLEARLY STATES THEY WANT THE GREECE DEAL DONE BEFORE THE EMERGENCY MEETING ON MONDAY! WOO HOO
WE ALSO EXPECT TO SEE VALIDATION OF FUNDS BEING MOVED FOR IRANS PAYMENTS BASED ON LAST NIGHTS ARTICLES!
NOW IT’S JUST POSSIBLE WE ARE ENTERING THE “OK JACK” PHASE FOR SEVERAL CURRENCIES!
I HOPE AND PRAY FOR ALL OF US!
WE KNOW THEY LIKE TO LAUNCH IMPORTANT THINGS ON THE 8TH!
DON’T FORGET THEY DID IT TO FORM IRAQ’S GOVT. SEPT. 8TH 2014, AND WHEN THEY DROPPED THE ZEROS BEHIND THE CURTAIN TO MAKE REMITTANCES COUNTRY TO COUNTRY ON MARCH 8TH 2015!
THEY USED THE DOLLAR WITH CONTRACTS TO PROTECT THE NOTE COUNT ON THE DINAR FROM THAT POINT!
IS IRAQ READY TO PULL BACK ITS’ CURTAIN AND TO PAY IN DINAR? MMMM
SUNDAY WOULD BE THE BEST TIME FOR BANKS TO SYNC A MULTIPLE CURRENCY RESET AS WELL.
BE ASSURED I’M PICKING NO DATES HERE BUT SIMPLY WATCHING THE PROCESS UNFOLD AND WATCHING THE LOGIC AND PATTERNS THAT THEY FOLLOW!
SEEMS THAT TOO MANY THINGS ARE HAPPENING THIS WEEKEND BY SUNDAY! DOC IMO
Mountainman: Will the GREECE SAGA Ever END……So Many MAJOR Catastrophes {CONVERGING} Globally and yet (ALL) in tension to A Coming Reality……Grease these Skids and Let’s get Moving w/ the REAL GRAVY TRAIN……Sounds DELICIOUS doesn’t it….???….LOL
Remember A STAGE is Set for Countries, Events, and the TIMING on {WHEN} they Happen…..the IMF is Laying Out (THEIR) Directives is ALL and GREECE will Follow Suit………Beautifully………This SUMMER will Be HOT One……Better WEAR Extra Sunscreenas this One UNWINDS……IMO
Blessings,Mountainman (8)=New Beginnings……..to Prepare for……The HEAT is ON……..
Thunderhawk: IMF tells eurozone to start Greek debt talks
The International Monetary Fund has told eurozone finance ministers they must immediately begin negotiations to grant debt relief for Greece despite German opposition, upending carefully orchestrated negotiations ahead of an emergency meeting on Monday.
In a letter to all 19 ministers sent on Thursday night and obtained by the Financial Times, Christine Lagarde, the IMF chief, said stalemated talks with Athens to find €3 billion in ‘contingency’ budget cuts, which have gone on for a month, had become fruitless and that debt relief must be put on the table immediately, or risk losing IMF participation in the program.
“We believe that specific economic reform measures, debt restructuring, and financing must now be discussed contemporaneously,” Lagarde wrote. “For us to support Greece with a new IMF arrangement, it is essential that the financing and debt relief from Greece’s European partners are based on fiscal targets that are realistic because they are supported by credible measures to reach them.”
The IMF has come under intense criticism in Greece, where senior officials in Alexis Tsipras’s government have blamed Poul Thomsen, the IMF’s European chief, for making excessive austerity demands and holding up an agreement on the €86 billion bailout’s first review.
But Lagarde’s letter makes clear the IMF wants less austerity, arguing that the budget surplus target agreed last year between the EU and Athens — a primary surplus of 3.5 percent of gross domestic target by 2018 — is unrealistic and should be drastically reduced.
A primary surplus is a country’s budget surplus when debt payments are not included.
“A clarification is needed to clear unfounded allegations that the IMF is being inflexible, calling for unnecessary new fiscal measures and — as a result — causing a delay in negotiations and the disbursement of urgently needed funds,” Lagarde wrote.
Originally, Monday’s eurogroup meeting, which was to be held last week but was rescheduled after negotiations stalled, was seen as a make-or-break session, with both sides needing to reach a deal before Britain’s EU referendum campaign intensifies next month before a June 23 vote.
Athens is facing €3.5 billion in debt payments in July that it needs bailout aid to pay, and EU officials have told Greek government officials they do not want messy negotiations to continue during the Brexit campaign — meaning if no agreement is reached this month, leaders will not begin discussions again until just weeks before a possible default.
Similar last-minute talks a year ago rattled the Greek economy and raised questions about whether Greece could be ejected from the eurozone.
Relations between the IMF and Athens, already strained after last year’s brinkmanship, have reached a new low in recent weeks following WikiLeaks’ publication of a transcript of a private teleconference between Thomsen and other IMF officials — a transcript Greek officials claimed showed the IMF was negotiating in bad faith.
Athanasios Papachristopoulos, a Greek MP from the junior coalition member in Tsipras’s Syriza-led government, on Thursday appeared to admit the recording was made by Greek authorities and given to WikiLeaks. Papachristopoulos told the Greek parliament the government had decided to ‘blurt out’ the transcript, though he later went on national television to insist he was misinterpreted.
In her letter, Lagarde wrote that all sides have nearly agreed on a core set of economic reforms that would cut the Greek budget by 2.5 percent of GDP by 2018. Some officials believe that list could be finalized at Monday’s eurogroup meeting.
But Lagarde stuck by the IMF’s assessment that such reforms would only produce a primary surplus of 1.5 percent in 2018 — not the 3.5 percent the EU has mandated. Instead, Lagarde urged the EU to change its target to 1.5 percent, a sign that she believes Brussels is demanding too much austerity of Athens.
http://iran-daily.com/News/150891.html
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BACKDOC: THERE SEEMS TO BE NO GOOD SOLUTION IN SITE! THERE SEEMS TO BE A DIFFERENCE OF OPINION AS TO WHO SHOULD TAKE THE LOSS IF THEY DEFAULT.
JUST ONE QUESTION, SINCE WHEN DO BOND HOLDERS NOT TAKE A HIT ON THEIR RISK?
SEEMS TO ME THE BOND HOLDERS SHOULD BE THE ONES AT RISK NOT THE U.S. TAX PAYER!
OHH AND WILL THIS PROBLEM HAVE AN AFFECT ON THE DOLLAR? MMMMM
I ALSO REMEMBER THE FED IS BASED THERE! MMMM DOC IMO
Thunderhawk: Backdoc Alert
How Puerto Rico’s $70 Billion Crisis Is About to Get Catastrophic
We consider the worst- and best-case scenarios
Every week, hosts Tori Stilwell, Dan Moss and Aki Ito bring you a jargon-free dive into the stories that drive the global economy.
Puerto Rico missed a $400 million debt payment on Sunday, and bigger, more consequential defaults could follow. But how did things get so bad in the first place?
Michelle Kaske, Bloomberg’s municipal bonds reporter, joins Dan and Aki to discuss the best- and worst-case scenarios for the U.S. Territory as its next payment deadline approaches. http://www.bloomberg.com/news/articles/2016-05-05/how-puerto-rico-s-70-billion-crisis-is-about-to-get-catastrophic
Backdoc Alert
Puerto Rico Says Economy to Contract for Fifth Straight Year
Puerto Rico’s economic recession is poised to worsen as residents continue to leave the island, threatening to deepen the fiscal crisis that’s pushing the island to default on a growing share of its $70 billion of debt.
The Planning Board, which calculates the island’s economic growth, released its fiscal 2017 forecast, estimating a 2 percent drop in gross national product for the fiscal year beginning July 1. The commonwealth agency revised its forecast for the fiscal year ending June 30 to a 1.2 percent drop. The earlier estimate was for a 1.3 percent decline.
The commonwealth’s economy last expanded in fiscal 2012, when it saw a 0.5 percent boost, according to the Planning Board. It’s shrunk by an estimated 16.5 percent since 2007. Puerto Rico and its agencies borrowed as the economy contracted to fill budget shortfalls and now owe $70 billion. Governor Alejandro Garcia Padilla in June 2015 said the commonwealth was unable to repay all of its debts and would seek to reduce those obligations by asking investors to accept losses on their holdings.
A record number of residents left the island last year for work on the U.S. mainland. Another 240,000 Puerto Ricans are forecast to leave by 2025, according to the Planning Board. Its 11.7 percent jobless rate is higher than any state and double the national average.
Estimates of the extent of the slowdown were also adjusted for prior years. Projections for fiscal 2015, which ended June 30, 2015, were revised to a drop of 0.6 percent, compared with a prior estimate of a 0.7 percent decline. The fiscal 2014 estimate was revised to a contraction of 1.7 percent, from one of 0.9 percent.
Puerto Rico’s Government Development Bank failed to pay bondholders nearly $400 million on May 2. The default is the largest such payment failure by a commonwealth entity, after two smaller agencies skipped principal and interest payments. The GDB is working under an emergency period that allows the governor to restrict withdrawals for programs that support health, safety and education.
The commonwealth and its agencies owe $2 billion in principal and interest on July 1. Garcia Padilla has warned of continued defaults unless Puerto Rico reaches a restructuring agreement with its creditors.
http://www.bloomberg.com/news/articles/2016-05-06/puerto-rico-says-economy-to-contract-for-fifth-consecutive-year
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BACKDOC: I THINK ITS INTERESTING THAT THE CLOSER WE GET TO THE END OF THE YELLOW BRICK ROAD WE SEE SAUDI ARABIA TAKING THE NUCLEAR OPTION I WOULD SAY!
IN ONE WEEKEND THEY CHANGE THE CENTRAL BANK GOVERNOR AND THE MOST POWERFUL OIL MINISTER IN THE WORLD! WOW!
THEY TALK ABOUT RESTRUCTURE AND YET THEY USE TEPID TALK ABOUT MAINTAINING THE DOLLAR PEG! MMMMM
IS THIS JUST THE BEGINNING OF A BIGGER CHANGE? MMMM I THINK SO! DOC IMO
Mountainman: As the OIL MARKET {TRANSITIONS} w/The RULES of CONTRACTS and TRADE…..OIL is Going to be Another Factor to Disrupt Global Markets and Economies……
Those Unaware will have KNEE JERK {Reactions} and The Ups and Downs will Ensue……TPP will Cover this Stabilization in the Future, but in this Interim TIME……
A Changing of the Guard so to Speak can Be A Good Thing w/ A Fresh Perspective and Positive Energy…….
The OLD WAY is Clearly being Drained AWAY and A New Path Paved W/ BLACK GOLD will Certainly Iron Out the New Laws of CONTROL/CONVERGENCE……IMO
Blessings,Mountainman (8)=New Beginnings………for A Means to a COLLECTIVE ENDING……
Thunderhawk: Backdoc Alert
Here’s what the departure of Saudi Arabia’s al-Naimi means for oil prices
Oil prices could rise in the near term on volatility
He was known to some as the Alan Greenspan of the oil world.
That is Ali al-Naimi, Saudi Arabia’s powerful oil minister, who was fired from his post on Saturday. He will be replaced by Khalid-al Falih, the chairman of the country’s state oil company, Saudi Aramco.
“This is a historic one. [Al-Naimi] is the guy who for all intents and purposes has been the global oil market for the last 30 years,” said Phil Flynn, senior market analyst at Price Futures Group.
Al-Naimi gained global respect for turning the biggest oil cartel in the world, otherwise known as the Organization of the Petroleum Exporting Countries (OPEC), into a respectable organization, Flynn said in a telephone interview.
And just as former Fed Chairman Greenspan would lower or raise interest rates when he thought the market needed it, al-Naimi would add or hold back on oil depending on the energy market’s needs, he added.
The move has reminded some who is ultimately in charge. While al-Falih, the new oil minister, now has one of the most powerful posts in the world, Flynn said there is no doubt that 36-year old Deputy Crown Prince Mohammed bin Salman is running the show in Saudi Arabia. “This guy is the new power broker in that country,” he said. Read more at:
http://www.marketwatch.com/story/heres-what-the-departure-of-saudis-al-naimi-means-for-oil-prices-2016-05-07
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BACKDOC: WE SEE THAT THEY GIVE LIP SERVICE TO THE DOLLAR PEG BUT IN REALITY THEY ARE TALKING A DIFFERENT STORY TO OTHER SOURCES!
LIKE I TOLD YOU WE DON’T KNOW HOW THIS WILL PLAY OUT EXACTLY BUT WE KNOW WHY AND WE KNOW THE EVENTUAL OUTCOME BECAUSE OF BLACK GOLD NOW TAKING THE SDR INTO THE RESERVE CURRENCY! DOC IMO
Mountainman: There’s A Shake Down Happening here w/OIL and A New Perspective has Risen w/The Saudis……As A New Alignment is Happening between Countries Traditional Positions on How they have Relied on OIL REVENUES……
The SHIFT is Now in Play……
IRAN has Agreed to Halt On it’s Production and Now the PATH is PAVED w/ the Privatization of ARAMCO……A New C.Bank Governor Who is Knowledgeable w/Experience on their Monetary Policy……Opens the Doors for Fresh Vision for A New Reality w/New Rules for {ALL} to Follow…….
Negotiations and Applications in this NEW OIL REALITY is Just the Start for How the Saudis will Lean Away from (DEPENDENCE) on the DOLLAR……for We Know WHERE that and The PETRO/DOLLAR are Heading w/the CURRENTS of the Markets……..
The Tables of REVENUE are Turning towards NEW VALUES…….Keep A Watch on this One as it CONVERGES w/MANY. IMO
Blessings,Mountainman (8)=New Beginnings…….for the PRICE and DECISIONS w/OIL
Thunderhawk: DOUBLE PLAY!! HUGE ALERT!!
Backdoc Alert : Saudi Arabia Replaces Veteran Oil Minister in Government Revamp
Saudi Arabia replaced its veteran oil minister with a close ally of the king’s increasingly influential son, Deputy Crown Prince Mohammed bin Salman, as the world’s largest crude exporter embarks on an economic overhaul designed to make it less reliant on energy.
After more than two decades in the post, Ali Al-Naimi, who’s been the central player in scores of OPEC meetings and steered global crude markets through several boom-and-bust cycles, will be succeeded by Khalid Al-Falih, currently chairman of state oil company Saudi Arabian Oil Co., the official press agency reported on Saturday. The change was part of a wider government revamp that also saw a new central bank governor. Read more at:
http://www.bloomberg.com/news/articles/2016-05-07/saudi-aramco-chairman-al-falih-replaces-al-naimi-as-oil-minister
Backdoc Alert
Saudi Replaces Central Bank Governor in Major Reorganization
Saudi Arabia appointed Ahmed AlKholifey as central bank governor, replacing Fahad Al Mubarak as part of a government reorganization, the official Saudi Press Agency reported.
AlKholifey, named to the role in a royal order from King Salman, was previously deputy governor for research and international affairs at the central bank, the Saudi Arabian Monetary Agency.
The announcement comes as the world’s biggest crude producer reorganizes ministries to “focus and clarify responsibilities and ease procedures to offer better services,” Saudi Press Agency reported. Changes include replacing longstanding oil minister Ali Al-Naimi, the architect of the 2014 switch in OPEC policy that’s since roiled crude markets, with Khalid Al-Falih, chairman of the Saudi Arabian Oil Co.
Read more at: http://www.bloomberg.com/news/articles/2016-05-07/saudi-names-alkholifey-central-bank-governor-arabiya-reports
BACKDOC: WHAT WOULD YOU DO IF YOU WERE A COUNTRY AND YOU WERE ABOUT TO GET YOUR REAL CURRENCY BACK WITH A VALUE?
THAT’S RIGHT, YOU WOULD DE-DOLLARIZE QUICKLY! ESPECIALLY IF YOU KNEW THE DOLLAR WAS GOING TO CRASH SOON!
NO WONDER VIETNAM PUT 80% OF THEIR DEBT INTO DOLLARS! HEE HEE THAT’S WHY THEY CALLED IT A CLEVER MOVE!
OH I GET IT! THEIR DEBT CRASHES WHILE THEIR SOVEREIGN CURRENCY SKYROCKETS! YIPPIE!
DOC IMO
Mountainman: You got that……FOLLOW the RULES or ELSE…….No CHEATING SCAMMING or EXPLOITING for GAIN……Now do it Again and I Will SLAP those Greedy HANDS……..IMO
Blessings,Mountainman (8)=New Beginnings……..and New STANDARDS for BANKING………
Thunderhawk: VIETNAM: State bank governor gets strict with USD deposit rates
The Governor of the State Bank of Vietnam (SBV) on May 6 issued documents requesting strict compliance with the rules on ceiling USD deposit interest rate which is capped at 0% annually.
The move came following reports about several banks raising USD deposit interest rates to a level higher than the regulated limit to attract foreign currency.
The Governor asked credit organisations and foreign banks to seriously abide by existing regulations on deposit rates, especially those for US dollars.
The documents also ban technical measures to surpass USD rates and unhealthy competition.
The SBV will not allow those credit organisations which are found in violation of the above rules to open new branches or representative offices, or launch new services.
Violators may also have some banking operations suspended if necessary.
The SBV Governor also asked for increased inspection and strict punishment for violations.
http://english.vov.vn/economy/state-bank-governor-gets-strict-with-usd-deposit-rates-319127.vov
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Mountainman: Don’t You like the Sound of the Words…….IMPLEMENT/IMPLEMENTATION…….???……Yah…..Me too…..w/VIETNAM’S Rise in VALUE Looming Around the Corner it is Good to See the WB and SECO Directing the Next Steps for A Continued PROGRESS for this Project……Yes Indeed…..IMO
Blessings,Mountainman (8)=New Beginnings……..for PROGRESS…….INTERNATIONALLY
BACKDOC: CANADA HAS THE REPUTATION OF MANAGING BANKS VERY WELL. WITH ALL THE GROWTH ABOUT TO EXPLODE THERE THEY NEED ASSISTANCE! DOC IMO
VIETNAM: Technical assistance project for improving public finance approved
The Prime Minister has just approved the contents of a technical assistance project on consultation and analysis of public finance management in Vietnam funded by the Swiss Economic Cooperation and Development (SECO) and the Global Affairs Canada through the World Bank (WB).
The project aims to improve the public finance system in Vietnam in terms of efficiency and effectiveness of public expenditure and public service.
The project comprises five components: improving the connection between planning and state budget, improving the efficiency of controlling budget use, improving the provision of budget information, improving systems to ensure budget stability and determining and managing fiscal-year risks.
The Ministry of Finance (MoF) will implement the project over five years.
The total cost of the project is US$6.33 million, of which US$5.73 million is sourced by non-refundable aid from SECO and the Global Affairs Canada sponsored, and the remaining US$600,000 comes from Vietnam’s budget.
The PM assigned the MoF to finalise documents for the project and be accountable for the appraisal and implementation of the project
.
http://english.vov.vn/economy/technical-assistance-project-for-improving-public-finance-approved-318951.vov
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Mountainman: You See….???……Nobody wants to Fight right Now……It’s A TIME of Preparation and Reparation that Establishes A Countries FUTURE in PROSPERITY and GROWTH…….Even KUWAIT needs to EXPAND their RELIANCE on OIL Alone for their ECONOMY…..
These COOL CATS are Learning QUICK……I Like It…..IMO
Blessings,Mountainman (8)=New Beginnings…….for An Expansion of Ones MINDSET……
Thunderhawk: Kuwaiti PM concludes Vietnam visit
On May 7, Kuwaiti Prime Minister Sheikh Jaber Mubarak Al-Hamad Al-Sabad returned home after his two-day official visit to Vietnam at the invitation of Prime Minister Nguyen Xuan Phuc.
The Kuwaiti Prime Minister and Vietnamese leaders expressed their delight at all-around cooperation between the two countries over the past four decades.
They affirmed their determination to bolster cooperation, especially in trade, oil and gas, investment, development aid, employment and education and training.
The leaders compared notes on international issues, including those regarding the Middle East and the East Sea, during which they highlighted the settlement of disputes by peaceful measures in compliance with international law and the UN Charter.
They condemned terrorism, underscoring their backing of the international community’s joint efforts against terrorism.
Both sides underlined the need to intensify the exchange of information and make more active contributions to the combined efforts to safeguard peace, stability, cooperation and development in the globe.
A number of agreements on culture, arts, sports, trade and oil and gas were signed during the visit.
http://english.vov.vn/diplomacy/kuwaiti-pm-concludes-vietnam-visit-319109.vov
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BACKDOC: LOOKS TO ME LIKE THE LAUNCH OF THE ASEAN COUNTRIES REGIONAL FORUM WILL END UP WITH DISCUSSING THE LAUNCH OF TPP AND SECURITY COOPERATION! THE SOUTH CHINA SEA ISSUE IS HUGE! CHINA NO LIKEY! DOC IMO
Mountainman: Sheesh HAWK……WHERE in this ARTICLE does it say {TPP}……LOL……..It’s TIME to IMPLEMENT and (8) isn’t Just A Number it is MANY things in this New Global Reality…..As said Earlier…..MANY Events {CONVERGING} and it (ALL) Points to New VALUES………
TPP is saying WHAT Most Teens say When they Turn 18……Love ya…..But it’s TIME for ME to FLY……IMO
Blessings,Mountainman (8)=New Beginnings……….A LAUNCH has Been IMPLIED…….{ALL} SYSTEMS READY,SET,…..
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Thunderhawk: US Assistant Secretary travels to Laos, Vietnam, and Malaysia
US Assistant Secretary for East Asian and Pacific Affairs Daniel Russel will travel to Vientiane and Luang Prabang, Laos; Hanoi, Vietnam; and Kuala Lumpur, Malaysia, from May 6 – 12.
According to a US Department of State’s press release, Russel will visit Vientiane, Laos, where he will take part in the US-Laos Comprehensive Bilateral Dialogue with a Lao Ministry of Foreign Affairs delegation on May 6.
He will meet with senior officials in Luang Prabang, for the Lower Mekong Initiative, Friends of the Lower Mekong, East Asia Summit, and ASEAN Regional Forum from May 7-8.
He will pay a visit to Hanoi from May 9–10, during which he will discuss US-Vietnam bilateral relations and the East Sea and ASEAN issues with senior officials.
From May 11-12, Russel will fly to Kuala Lumpur, Malaysia, to attend the 29th ASEAN-US Dialogue. He will also meet with senior Malaysian officials to talk bilateral issues,including security cooperation and TPP implementation.
http://english.vov.vn/world/us-assistant-secretary-travels-to-laos-vietnam-and-malaysia-319027.vov
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BACKDOC: THE PRESSURE ON CHINA TO REFORM THEIR STATE OWNED ZOMIE COMPANIES IS REAL. WITH ALREADY 22 COMPANIES THIS YEAR DEFAULTING ON THEIR BOND DEBT!
REMEMBER AS WE HAVE CONTRACTION OF DEFLATION BAD DEBT RISES. ALTHOUGH CHINA CLAIMS TO HAVE SIGNIFICANT GROWTH ACTUAL NUMBERS MAY BE FAR LESS ACCORDING TO OTHER EXPERTS!
CONSOLIDATION OF THEIR DEBT AND MORE PRIVATIZATION WILL BE THEIR TREND ALTHOUGH FUTURE PLANNING SEEMS TO STILL BE WEAK DUE TO THEIR PREVIOUS FOCUS ON EXPORTS!
THEY ARE BEING PULLED AWAY FROM THE PUNCH BOWL WITH TPP AND OTHER EMPIRE TRADE AGREEMENTS AND THEY DON’T LIKE IT! DOC IMO
Mountainman: It’s the Bottom of the 9th Inning Here BASES are Loaded……However You have 2 BALLS, 2 STRIKES, and 2 OUTS…….A HOMERUN is Needed to Win this One……But Who is Able to knock it Out of the Ball Park at this Point……
It’s Looking Dismal for A Large Economy like CHINA who is way Over Leveraged here…… Who just may have to Take their Bat and Go Home……A Repricing and Adding Stronger Measures in their Business Affairs is Obviously Hurting them Badly……As to How they Rectify these Issues…..we Watch and Wait…….
They have much to Accomplish between Now and OCT 1,2016…….The USA will Work in Trade w/ them, but the New Rules are Biting Off that Which they Stole and Manipulated along the Way…..No MORE of that NONSENSE ALLOWED………It’s Called a NEW REALITY for A Reason…..IMO…….Hmmm
Blessings,Mountainman (8)=New Beginnings…….And oh it is Sometimes Sooooo Painful…..Says CHINA
Thunderhawk: TRIPLE PLAY
Backdoc Alert
China’s debt problem is bigger than you think
Bad loans are 10 times as large as official Chinese data suggest, research firm says
http://www.marketwatch.com/story/chinas-debt-problem-is-bigger-than-you-think-2016-05-06
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Backdoc Alert
CLSA Sees China Bad-Loan Epidemic With $1 Trillion of Losses
Chinese banks’ bad loans are at least nine times bigger than official numbers indicate, an “epidemic” that points to potential losses of more than $1 trillion, according to an assessment by brokerage CLSA Ltd.
Nonperforming loans stood at 15 percent to 19 percent of outstanding credit last year, Francis Cheung, the firm’s head of China and Hong Kong strategy, said in Hong Kong on Friday. That compares with the official 1.67 percent.
Potential losses could range from 6.9 trillion yuan ($1.1 trillion) to 9.1 trillion yuan, according to a report by the brokerage. The estimates are based on public data on listed companies’ debt-servicing abilities and make assumptions about potential recovery rates for bad loans.
Cheung’s assessment adds to warnings from hedge-fund manager Kyle Bass, Autonomous Research analyst Charlene Chu and the International Monetary Fund on China’s likely levels of troubled credit. The IMF said last month that the nation may have $1.3 trillion of risky loans, with potential losses equivalent to 7 percent of gross domestic product.
‘Shadow Banking’
CLSA estimates bad credit in shadow banking — a category including banks’ off-balance-sheet lending such as entrusted loans and trust loans — could amount to 4.6 trillion yuan and yield a loss of 2.8 trillion yuan.
CLSA cites a diminishing economic return on stimulus pumped into the economy as among the reasons for a worsening outlook, with Cheung saying at a briefing that bad loans had the potential to rise to 20 percent to 25 percent.
“China’s banking system has reached a point where it needs a comprehensive solution for the bad-debt problem, but there is no plan yet,” he said in the report.
In one initiative, the government may let banks convert some bad loans into equity, a tool used to bail out the banking system and state-owned enterprises in the 1990s. IMF staff are among those to have warned that such a move could backfire by lending support to debt-laden “zombie” companies that should be allowed to fail. Read more at:
http://www.bloomberg.com/news/articles/2016-05-06/clsa-sees-china-bad-loan-epidemic-with-losses-over-1-trillion
Backdoc Alert
China Foreign Reserves Increase in April on Yuan Sentiment
China’s foreign-exchange reserves increased for the second month in a row as market sentiment toward the yuan improved and a stronger yen and euro boosted the headline number.
The world’s largest currency hoard rose by $7.089 billion to $3.22 trillion in April, the People’s Bank of China said in a statement Saturday. That compares with the $3.20 trillion expected by economists surveyed by Bloomberg.
The market’s confidence in the yuan has strengthened as data released in April showed a rebound across several indicators and the Federal Reserve signaled it will hold off on interest-rate increases. Whether China’s momentum can be sustained remains to be seen, as some suggestions of a U.S. rate hike in June may revive capital outflow pressures.
Read more at: http://www.bloomberg.com/news/articles/2016-05-07/china-foreign-reserves-rise-increase-as-yuan-sentiment-improves
