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geoduck Godfather of Hole UID 41248 Digest Posts 0 Credits 7512 Posts 3232 Karma 7419 Acceptance 1854 Reading Access 90 Registered 12-3-2010 Status Offline

#1 Post at 11-5-2010 23:48  Profile P.M.  Font size: S M L Inflation soaring in China Just heard in the news that China inflation is soaring. I've experienced this trend for some time now and think this is likely to continue. For now, food definitely costs more, housing and utilities too. I also noticed in the past 8 weeks, there's a lot more RMB in circulation in the form of new notes and an increase in the M1 supply means more inflation is on the way. It's a matter of time before WGs start charging more for their services. This will affect prices for WG's in Macau as well even though  prices were adjusted only in March. 141 DB WGs would also be charging more to make adjustments for their living standards on the mainland. On top of this the RMB's value is expected to appreciate. Bros, this is really bad news. [ Last edited by  geoduck at 11-5-2010 23:50 ]

Kennichi Kinky King UID 9144 Digest Posts 0 Credits 1607 Posts 1363 Karma 1569 Acceptance 759 Reading Access 50 Registered 6-3-2008 Status Offline

#2 Post at 12-5-2010 01:59  Profile P.M.  Font size: S M L Reply #1 geoduck's post Well the thing is China simply can't keep oppressing the RMB forever they have been doing for a very long time bank fractional reserves keep going up up and away. They should loosen the peg a bit against the USD. Problem is this will cost jobs, while inflation is often nearly invisible to most people, in the UK real inflation is around 18% and people are dumb enough to just keep blaming the companies selling goods. There are also lots of pissed off unemployed people in China right now, many more and you start to get serious unrest.... as many pundits have suggested China won't exist as a political entity and will fragment by 2025 at the latest. Life is short very...

atomic3d Throbbing Titan UID 41127 Digest Posts 0 Credits 3282 Posts 2642 Karma 3157 Acceptance 2501 Reading Access 70 Registered 10-3-2010 Status Offline

#3 Post at 12-5-2010 03:05  Profile P.M.  Font size: S M L QUOTE: Originally posted by Kennichi at 12-5-2010 01:59 as many pundits have suggested China won't exist as a political entity and will fragment by 2025 at the latest... I've been hearing this political fragmentation/end of the communist argument ever since Tianmen and it simply doesn't happen. I think the Chinese communists are far smarter and ruthless than anyone had anticipated and without some sort of outside calamity e.g. Another great depression or global warming turns China into a desert, I simply don't see China falling apart. The Chinese are far more cohesive than anyone outside the country gives them credit for (particularly the Han)and as long as the communist government controls the army and media, then the small protests that do happen from time to time will continue to be short and invisible.

Weelock Throbbing Titan UID 69 Digest Posts 0 Credits 4376 Posts 2584 Karma 4304 Acceptance 1435 Reading Access 70 Registered 19-2-2007 Location Mars Colony, Mongo City Status Offline

#4 Post at 12-5-2010 03:45  Profile P.M.  Font size: S M L QUOTE: Originally posted by geoduck at 11-5-2010 23:48 Just heard in the news that China inflation is soaring. I've experienced this trend for some time now and think this is likely to continue. For now, food definitely costs more, housing and utilities t ... Has anyone exchange money recently for USD or EURO ?  All the major banks rates are fixed. In others words, if you go went to Bank of China and to the bank down street, like Bank of Agriculture, it's the same rate. Feb/ March 2010, I got a rate of 6.8 rmb to 1 for USD at a street store. I wonder what is it now.... BTW, I trust this store but be careful dealing with street store to exchange money. [ Last edited by  Weelock at 12-5-2010 07:04 ]

sex1 Carnal Conqueror UID 27693 Digest Posts 0 Credits 252 Posts 261 Karma 253 Acceptance -13 Reading Access 30 Registered 14-7-2009 Status Offline

#5 Post at 12-5-2010 06:29  Profile P.M.  Font size: S M L I believe it went as low as 1 USD for 1.3 Euro.  May be slightly higher now.

geoduck Godfather of Hole UID 41248 Digest Posts 0 Credits 7512 Posts 3232 Karma 7419 Acceptance 1854 Reading Access 90 Registered 12-3-2010 Status Offline

#6 Post at 12-5-2010 07:59  Profile P.M.  Font size: S M L Reply #4 Weelock's post USD1 to RMB6.8 is a very good rate and with street stores you get a much better rate than in banks. As long as you have a regular store you goto and they have a cash counting machine that can detect counterfeit notes, it should be OK.

TheButler Erotic Emperor UID 31268 Digest Posts 0 Credits 2606 Posts 2131 Karma 2576 Acceptance 603 Reading Access 60 Registered 18-9-2009 Status Offline

#7 Post at 12-5-2010 08:11  Profile P.M.  Font size: S M L Reply #2 Kennichi's post Yeah, consumption keeps going up, incomes are rising, and the economy is exposed more and more to international pricing (particularly in the raw material imports).  Only direction prices can go is up. I didn't do it.  Really I didn't. The Butler

pandaboy Lustful Lord UID 4884 Digest Posts 0 Credits 681 Posts 408 Karma 672 Acceptance 189 Reading Access 40 Registered 21-11-2007 Status Offline

#8 Post at 12-5-2010 08:30  Profile P.M.  Font size: S M L China's GDP growth is unsustainable because most of it is in fixed asset investment.  Economist have thrown around numbers between 6-9%, which means if you stripped this out, China is growing at a slower rate than the U.S.  Chinese love real estate, but real estate is a non-producing asset and eventually all these resources are wasted and real estate will crash.  China will be led into a very long and protracted recession, and the RMB will actually depreciate against the dollar.  Word of the street (wall street) is that someone is taking the other side of all those RMB forwards.  In other words, hedge funds are betting against RMB appreciation 3-5 years out.  Bubbles always burst.  There is no way prime Beijing is worth anywhere close to prime Manhattan or even prime SF for that matter.

geoduck Godfather of Hole UID 41248 Digest Posts 0 Credits 7512 Posts 3232 Karma 7419 Acceptance 1854 Reading Access 90 Registered 12-3-2010 Status Offline

#9 Post at 12-5-2010 08:31  Profile P.M.  Font size: S M L Reply #7 TheButler's post Prices in China are going up in the cities much faster than most people realize. In the past, the Central Government has been suppressing inflation as they set prices for food produced by the famers. Thus, the farmer is not getting much benefit from the economic boom. This is about to change as the Government is now allowing food prices to rise. I think they have no choice as the farmers will eventually revolt if they are not allowed to participate in the economic boom.

geoduck Godfather of Hole UID 41248 Digest Posts 0 Credits 7512 Posts 3232 Karma 7419 Acceptance 1854 Reading Access 90 Registered 12-3-2010 Status Offline

#10 Post at 12-5-2010 08:41  Profile P.M.  Font size: S M L Reply #8 pandaboy's post Agree the economy in China will eventually bust and property will be a major cause of this. However, there's still lots of cash at the moment to fuel an asset bubble and timing is everything. At this rate, it will be another 5 years before this happens. In the past, China will just simply stop all property projects and lending but these days they cannot afford to do this as their exports are on the decline. Don't think the RMB will decline against the US$ as it is still too undervalued and besides, China holds a trillion in US$ assets. This should give the Chinese some leverage and buffer. [ Last edited by  geoduck at 12-5-2010 08:50 ]

kfcfan Carnal Conqueror UID 24581 Digest Posts 0 Credits 323 Posts 421 Karma 323 Acceptance 9 Reading Access 30 Registered 7-5-2009 Location USA Status Offline

#11 Post at 12-5-2010 10:02  Profile P.M.  Font size: S M L i've heard talks of a real estate bubble in china....i suppose i should let go of my china real estate stock then.... i was in china during jan '10 and i got 6.8 for 1USD on the street while the banks were giving 6.75 My buddies have informed me that 2 weeks ago they were getting 6.7 for 1USD on the street.

pandaboy Lustful Lord UID 4884 Digest Posts 0 Credits 681 Posts 408 Karma 672 Acceptance 189 Reading Access 40 Registered 21-11-2007 Status Offline

#12 Post at 12-5-2010 10:07  Profile P.M.  Font size: S M L Reply #10 geoduck's post You're not considering the massive amount of debt incurred by municipalities, which will surface eventually.  China will have to use all those reserves to bail outits banking system.  Remember 2007.  Everything was fine and then 2008 hit like a hurricane.  This can happen again in China, and I will be there with my dollars looking for WGs!!!

geoduck Godfather of Hole UID 41248 Digest Posts 0 Credits 7512 Posts 3232 Karma 7419 Acceptance 1854 Reading Access 90 Registered 12-3-2010 Status Offline

#13 Post at 12-5-2010 10:41  Profile P.M.  Font size: S M L Reply #12 pandaboy's post There may be lots of debt with municipalities, perhaps US$1 trillion but then only about 10-20% of this is in doubt. These are secured with infrastructure projects and property to the banks. It is  crucial that property prices remain buoyant and think prices will stay firm for the next 5 years because prices are still generally low. It's a very delicate situation for the Central Government to balance property prices and municipality debt. One way is to make it easier for overseas investors to invest in properties if worse comes to worse. If things cannot be sorted out in the next several years then a bust is imminent but the situation now is not as grim as it seems. [ Last edited by  geoduck at 12-5-2010 10:49 ]

atomic3d Throbbing Titan UID 41127 Digest Posts 0 Credits 3282 Posts 2642 Karma 3157 Acceptance 2501 Reading Access 70 Registered 10-3-2010 Status Offline

#14 Post at 12-5-2010 17:41  Profile P.M.  Font size: S M L Reply #13 geoduck's post This is a newsletter of one of the advisers predicting a bust scenario for China it's quite long so I've just put up the headings and a link. Exit the Dragon The investments you need to ditch now – or China's 2010 collapse could clean you out REVEALED IN THIS MUST-READ LETTER... http://www.portphillippublishing ... l=111959&r=Milo [ Last edited by  atomic3d at 12-5-2010 18:34 ]

Kennichi Kinky King UID 9144 Digest Posts 0 Credits 1607 Posts 1363 Karma 1569 Acceptance 759 Reading Access 50 Registered 6-3-2008 Status Offline

#15 Post at 12-5-2010 17:47  Profile P.M.  Font size: S M L Reply #9 geoduck's post Price controls NEVER work, they only lead to shortages, unless you price control through the entire supply chain, the farmers will have increasing costs and eventually the costs will be so high and they can't raise prices such that they will stop producing. Price controls ALWAYS create shortages, Yugo slavia, Argentina, Weimar Germany they tried to contain inflation (hyper) with price controls and it didn't work. Life is short very...

Kennichi Kinky King UID 9144 Digest Posts 0 Credits 1607 Posts 1363 Karma 1569 Acceptance 759 Reading Access 50 Registered 6-3-2008 Status Offline

#16 Post at 12-5-2010 17:49  Profile P.M.  Font size: S M L Reply #11 kfcfan's post Yup real estate in China is 20-50 times annual salaries, the UK house price bubble burst with 5-10 times lending multiples. Also the housing build in China stands mostly empty, the key indicator in all of this is electricity consumption, you build a million homes you expect the electricity consumption to jump, but there is no corresponding increase. Only the middle and wealthy will be burned though as the piss poor exploited factory workers tend to live in dorms anyway. Life is short very...

pandaboy Lustful Lord UID 4884 Digest Posts 0 Credits 681 Posts 408 Karma 672 Acceptance 189 Reading Access 40 Registered 21-11-2007 Status Offline

#17 Post at 13-5-2010 11:04  Profile P.M.  Font size: S M L Reply #16 Kennichi's post It is definitely a bubble.  Imagine if Chinese real estate is just 20 times the average salary.  That would be like the average home in the U.S. being 800k USD, assuming an average family makes 40k USD.  Now, the average beijing white collar worker makes say 10k RMB a month.  That's like 120K per year.  How doesthat person afford a $2mm RMB apartment (20k per sq meter x100 sq meters).  They don't!!!!

geoduck Godfather of Hole UID 41248 Digest Posts 0 Credits 7512 Posts 3232 Karma 7419 Acceptance 1854 Reading Access 90 Registered 12-3-2010 Status Offline

#18 Post at 13-5-2010 15:15  Profile P.M.  Font size: S M L Reply #16 Kennichi's post The value of the properties are inflated as you must be referring to the  high end properties meant for the Company CEOs and Foreign investors. The average mean is more like 12 times annual salaries. In the cities, you can still get a decent apartment for well under RMB2m while on the outskirts of the city this is about RMB1m. In HK, if you take the Peak for instance, this would equate to 250x the annual salary, a luxury apartment in the mid levels would be 50x salary as well. I however do agree that most of these new developments are vacant. [ Last edited by  geoduck at 13-5-2010 15:21 ]

gangster Lustful Lord UID 38799 Digest Posts 0 Credits 515 Posts 570 Karma 514 Acceptance 19 Reading Access 40 Registered 27-1-2010 Status Offline

#19 Post at 13-5-2010 15:41  Profile P.M.  Font size: S M L Took a quite look at the link. For the poor guys like me who didn't join in the ride getting a house, I guess a bubble burst could actually be good news as we'd be able to get in the game. Obviously not so for the heavily invested. Seems like there are a lot of financial gurus here. Would be great if you could help out with some opinions (I know this ain't a financial forum but...) But hopefully many bros will benefit too. I aint' holding much RMB but my savings are in HK$ instead. With the HK$ pegged to the US$ I guess I'm getting a lot less RMB year by year. Are you guys holding much of your assets in RMB? If the Chinese estate bubble bursts, how much effect will it have on bank stocks. I've bought construction bank and ICBC stocks for over a year thinking they're blue chips good for like 10% increase/yr. The stock market's been hit recently though and I'm back to square one.

geoduck Godfather of Hole UID 41248 Digest Posts 0 Credits 7512 Posts 3232 Karma 7419 Acceptance 1854 Reading Access 90 Registered 12-3-2010 Status Offline

#20 Post at 13-5-2010 16:01  Profile P.M.  Font size: S M L Reply #19 gangster's post With the HK stock market at the moment, you cannot afford to hold onto anything for an extended period of time.The key is to trade, buy low and sell high and not be greedy, set very short time frame. Market looks toppy and you either should stay on the sidelines or just trade. Stick to some solid blue chips, these may not be as volatile but even if you get it wrong you can still hold on to these for the next rally or average down. With some 4th or 5th liner stocks, in this environment they can just go belly up or never recover. Take a look, where do you honestly think the HSI can go from here? It's tested the 23,000 level and tried breaking out several times but after all these failed attempts, market looks tired to me. [ Last edited by  geoduck at 13-5-2010 16:08 ]

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