China on the Edge??!!

My daughter and son are from China, so I am not one to throw dirt there readily. I am not going to hold off if I see problems but I am not a China basher.

Let me begin by noting a bit from the two weeks I spent in China last month. I was there in a few major cities, including Beijing, in 2005. We at the time considered the national bird to be the construction crain. Our first trip, in 2003, had craines in Beijing and other cities in every direction and active. Beijing especially was very active. This past time I saw some craines but none in motion, none actually building anything.

As an aside I have to note the the safety netting and scaffolding on most skyscrappers in China seems to be primarily built with bamboo. Yes, 50-60 story builldings were being built with bamboo scaffolding outside. Amazing! But now let us return to matters financial.

China Banks are in - perhaps - a smidge of trouble. Just a bit.

It seems the government in China has been leaning on banks there to do some improvident lending that could compare to U.S. stimulus spending. That is not the most disturbing part of this link. The most disturbing part is that it shows China to be on the edge and if China falls the world could be in for a major tumble. China has a host of issues to deal with, but as this article notes, its economy is not on the rebound it appears to be showing. And if you are into commodities, I recommend you read this carefully. The commodities rebound may be on its last leg if this is correct.

http://www.nakedcapitalism.com/2009/06/chinese-banks-accident-waiting-to.html

Madoff did not Make Off

Well it appears Madoff has not "made off" with the money. He just got 150 years in prison. Unless there are some significant advances in stem cell research or some other cutting-edge medical area, I am pretty sure that is a death sentence. Hey, he kept his Ponzi scheme going for a very long time. The question that courts will be working out for a while is the extent to which his wife and sons lose their fortunes as ill-gotten gains.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aHSYu2UPYrfo

Enough Bad News

But enough of the bad news. Stocks are up left and right. Asian stocks are in record territory.

http://www.bloomberg.com/apps/news?pid=20601087&sid=axAsfE6fJ.OM

And everything is coming up roses. Yep, there we go. But wait a second, Japan's jobless rate just rose to a five year high. Now it is only 5.2% which is a bit over half the rate here, but it is still high for Japan. This seems inconsistent with consumer spending being up but when you stop and realize it is all government stimulus, you know why the numbers seem inconsistent. They are not. It is just a case of where the dollars come from. Stimulus dollars in Japan, like here, support economic stats but to me it is a false support. We are spending future tax dollars, incurring debt, to make a debt driven recession end. NOT!! All we can or will build is a new bubble.

Nonetheless, Japan industrial production is up big time, I must admit. Production climbed a whopping 5.9% from the month before. Try to ignore the YOY numbers - not so impressive. By the way, the chart in the linked article tells it all.

http://econompicdata.blogspot.com/2009/06/japanese-industrial-production-jumps.html


Hey, Don't Worry, Car Sales Should be Up!

Well at least up from record lows. Still off 25% from a year ago (a bad year in itself) but it seems to be improving a smidge. I guess it is time for me to go buy a car before all the deals disappear.

http://www.nakedcapitalism.com/2009/06/chinese-banks-accident-waiting-to.html

Disclosures: None