» Asian Markets

A few years ago local Chinese municipalities had little debt. Today they have a $1.7 trillion mountain of it, nearly all of it financing economically non-viable projects in the name of “stimulus”. The proposed “solution” of course is to roll the debt over, while adding still ...

The latest January trade data of China showed the broadest measure of China’s global trade surplus fell to a several-year low to around 2.7% of GDP.  Export also collapsed to a negative 0.5% year-over-year in January, down from +13.4% in December.  Imports looked even more dire with a 15.3...

The stock market has been the place to be since October for sure. Climbing a classic wall of worry double–digit gains have been made in many global markets, economic recovery in the U.S. being the main driving force of the increasing optimism. The U.S. economic recovery continues to pick up momen...

Before starting on the subject of debt I wanted to make a quick reference to something sent to me by Charles Horner, a senior fellow at the Hudson Institute.  I am glad to say that the overinvestment thesis is much more widely acknowledged today than it was even two or three years ago, but one m...

Europe’s underlying problem is not budget deficits or even unsustainable debt.  These are mainly symptoms.  The real problem with Europe is the huge divergence in costs between the core and the periphery – in the past decade costs between Germany and some of the peripheral countries have di...

Two weeks ago on Wednesday night, after the Chinese markets closed, the People’s Bank of China announced that it had cut the minimum reserve requirement by 50 basis points to 21% for the large banks, and lower for the smaller banks.  With the announcement coming just hours before announcements...

The recent massive demand for ECB’s LTRO (Long Term Refinancing Operation)–nearly 490 billion euro in three-year 1% loans from 523 banks–only confirmed the suspicion of some market participants that European banks are having financing issues, and that the LTRO is unlikely to flo...

Today all eyes are on the eurozone financial crisis, crashing commodities, and the potential drag on US markets. But what caught my eye was the Shanghai Composite, which logged its 4th consecutive daily decline and the 15th decline in the last 20 sessions. My friend and occasional guest contributor ...

About 45 minutes outside of Shanghai are the deserted ruins of what was supposed to be the world’s largest amusement park. Instead, farmers have reclaimed the land planting corn and digging wells next to spires modeled after Disneyland. Please consider China’s deserted fake Disneyland Alon...

The Nikkei 225 gained 1.71% today, the 70th anniversary of Pearl Harbor Day. Forty-eight years after the attack, on December 29, 1989, the Nikkei hit its all-time high. Today’s rally takes the index further off its interim low of eight sessions ago; it is now only 77.6% below its 1989 high. M...

For years I have been arguing that the Achilles heel of the Chinese growth model is the unsustainable rise in debt that comes as a necessary consequence of capital misallocation fueled by bank lending.  Capital misallocation, I argued, was the nearly inevitable consequence of high investment gro...

This past week saw a massive rebound in global markets with double-digit gains in France and Germany. The S&P 500 had its best performance since the first week after the market low in March of 2009, but even with a 7.39% gain, it was in the bottom half of our gang of eight. The Shanghai Composit...