What Secret Do Global Banks Know about Chinese Banks?

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They’re dumping their stakes.

“Now is the right time for us to sell this investment,” announced Deutsche Bank’s newish co-CEO John Cryan on Monday after the long Christmas weekend when no one was supposed to pay attention.

It was how Cryan justified the deal to sell Deutsche’s entire 19.99% stake in Hua Xia Bank in China to Chinese insurer PICC Property and Casualty. He couched the deal in terms of executing Deutsche’s “strategic agenda”: boosting capital ratios to prop up the balance sheet.

Deutsche isn’t the first Western bank to bail out of banks in China where regulators limit foreign ownership stakes to a maximum of 20%, which brings some complications.

Goldman Sachs sold its stake in Industrial and Commercial Bank of China in 2013. Bank of America Merrill Lynch bailed out of its stake in China Construction Bank in a series of deals. BBVA, Spain’s second largest bank, has been cutting its stake in China Citic Bank from about 15% in 2013 down to 4.7% now, and that remainder appears to be earmarked for sale as well. Other banks are also likely to pick up their marbles and go, such as Standard Chartered, with its stake in Agricultural Bank of China.

Like Deutsche, they couched those deals in terms of boosting capital ratios and balance sheets.

And Deutsche could use some balance sheet repair. One of the largest and most leveraged global banks, it has been tangled up for years in a long list of scandals, court cases, and multi-billion-dollar settlements. Recently it suspended senior staff in Russia after suspecting they’d assisted in laundering money for sanctioned buddies of President Vladimir Putin. We were all shocked.

At the end of October, and in the tradition of new CEOs to frontload a big pile of dirty laundry, Cryan, who was appointed in June, announced massive losses (€6 billion for the quarter), including €1 billion in provisions against litigation expenses (now at €4.8 billion), the suspension of the dividend, and the elimination of 20,000 employees and contractors. Deutsche would pull out of ten countries mostly in Latin America and Europe. And it would dispose of its Deutsche Postbank, a retail bank with about 20,000 employees.

That loss also included a €649 million write-down of its stake in Hua Xia Bank, an admission of the economic slowdown and market rout in China, and perhaps some things Deutsche was discovering at Hua Xia Bank.

Chinese banks have become a magnet for speculation of just how far they’re stuffed with non-performing loans that should have been written off as losses long ago. No one knows the real numbers. They’re apparently a state secret. So speculation abounds. “Extend and pretend” reigns. Banks tend to topple when these things leak out.



So Deutsche, which knows a thing or two about how banks can brush big piles of toxic materials under the rug of financial statements, decided to get out while it still could. And if shareholders are asked to prop up Hua Xia’s balance sheet with fresh money, or are forced to give up their stakes during a bailout, Deutsche is going to be off the hook.

And it was a good time to sell. Not the best time – that would have been before the market collapsed this summer – but a good time. The New York Times:

In total, Deutsche Bank invested about 1.3 billion euros from 2006 to 2011. The final sale price will depend on how Hua Xia’s shares trade. But at the midpoint of the stated range, €3.45 billion, plus €400 million or so of previous dividends, Deutsche Bank will have nearly tripled its money on a gross basis.

Deutsche said that the deal, likely to be in the range of 23 billion yuan to 25.7 billion yuan ($3.55 billion to $3.96 billion), would boost its Tier 1 capital ratio of 11.5% by 30 to 40 basis points on “a pro-forma basis,” so maybe to 11.8% or 11.9%. Not exactly a huge move, given the pressures Deutsche is under from regulators and law enforcement globally, and from the never-ending scandals still to come.

But when CEOs of global banks, a very shrewd crowd, think in near-unison that it’s “the right time” – to use Cryan’s words – to sell Chinese banks, then there’s more at play than mere market timing. These stakes had been long-term strategic bets on the miracle economy of the world, not just trades. These CEOs know something. They’ve seen a thing of two behind the scenes. They might not have accurate data of just how big the piles of non-performing loans in China are, but they’re getting a feel. And it motivates them to dump their stakes in Chinese banks while they still can.

Steel, which goes into nearly everything from skyscrapers to cookware, has become symbolic for what ails China, the world’s largest consumer of it. After years of colossal booms in manufacturing and construction, which led to soaring demand for steel and ballooning steel-making capacity, everything has curdled. Read… China’s Steel Industry Bleeds, Prices Collapse, Losses Mount, and Now the Government Gets Gloomy




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  46 comments for “What Secret Do Global Banks Know about Chinese Banks?

  1. B.S.
    December 29, 2015 at 10:21 pm

    Maybe the banks are reading articles like the following:

    http://www.businessinsider.com/chinas-real-estate-bubble-is-collapsing-2015-12

    and are wondering about the financial shenanigans like the following:

    http://www.businessinsider.com/chinese-company-financial-docs-stolen-2015-12

    Hey, anybody out there still believe the financial numbers coming out of China?

    • Robert
      December 30, 2015 at 3:49 pm

      “Hey, anybody out there still believe the financial numbers coming out of China?” Hell, how do you know the financial numbers coming out of anywhere are believable? Central bankers are a very clubby lot, but how does CB A really know how much CB B is madly printing up in his basement? How does Christine LaGarde, on her tax-free throne at the IMF, having just graced China with SDR inclusion, know they didn’t print up a trillion yuan the next day? (after all, those guys invented fiat- maybe the gold standard was not, as Lenin said just for “lining urinals”)

  2. Nick Kelly
    December 29, 2015 at 10:31 pm

    Sorry if this is a nuisance but I had to say it: I’d like to know who is paying for Max Keiser’s advertising. I suspect it’s RT i.e., the Russian government, i.e. Putin.
    Not that there is anything wrong with that and I’m not saying they shouldn’t be able to do that, I’m just curious.
    The few times I’ve caught Keiser, who seems to be the weirdest duck to have come down the pike- I’ve wondered- what are HIS politics. I mean he apparently doesn’t like capitalism, which has its share of warts, but what is he advocating- Marxism??

    But moving on to a less problematic advert- this thing about producers seeking scripts is complete BS. I’ve had a few hundred bits and pieces published, and am the author of a e-book, Crypt Code.
    No big deal but my point is that I’ve researched marketing, agents etc.
    but you don’t have believe me, all you have to do is ask: scripts for what?
    Most people tempted by this ad will think: movie, what else?
    Well, stage plays, but there are always a LOT of scripts chasing producers, they don’t go looking.
    Which is why the really motivated author will try to mount ( budget produce) himself, or attract an Angel, ideally more than one.
    But most will think ‘movie’.
    Now if you don’t believe me- just ask yourself how many movies are NOT preceded by a book?
    Apart from Transformer type stuff, which really doesn’t have a script- the answer is almost none. The vast majority of movies with actual dialogue and a plot are adapted from a book- just read the credits or look up your favorite movie.
    Also- under US law, the author of the book gets right of first refusal on doing the screenplay.
    Especially suspicious, almost grotesque, is the apparent interest in ‘all genres’. No market is interested in everything. You would have to be brain dead not to notice the ongoing explosion in horror/ supernatural.
    Vampires, zombies etc. Any real agent will be more interested in what is hot.
    So if you want to sell a movie script, write a best seller, or at least a book
    that might attract someone in the business. Or if you are a movie person, do an indie short and enter any of many venues, with Sundance being the biggie.
    So why don’t these guys say they’re looking for books? Because that business, promoting books, is saturated. And most of IT is pretty dubious.
    This marketing resemble’s the ‘invention help’ and patent assistance ads which are notorious for running scams. People have actually gone to jail after one guy in a patent mill, couldn’t take it and blew the whistle.

    As someone who has spent some money on both, I just hate to see people being taken advantage of, because it’s not just like blowing money on some stupid gadget- its their dream.
    BTW- I almost forgot, I’ve done some editing- proofing for a few bucks and I know one outfit that charged a gal a few grand to E-PUBLISH her book. The e-book is in caps for emphasis. They didn’t print a page.
    I e-published Crypt Code for nothing- with friends helping.
    They stuck it to her.
    Second thing I almost forgot- the VERY first time I ever gave out my VISA number it was to a movie scam run by an outfit called ‘The Vault’
    They sucked me in by advertising a ‘one time’ trial payment. But every month there was the deduction.
    Fortunately I had a very sympathetic ( I didn’t know her) employee with RBC and finally after reading their ad, the manager said: “I’m phoning Visa fraud!”
    The Vault is still in ‘business’

    But I hope this site can attract ads ( believe it or not) because I enjoy it
    and I’m impressed by Richter’s work ethic.

    • Nick Kelly
      December 29, 2015 at 11:15 pm

      Ps: there are also scripts for sit-coms etc. but this complicated area is not best approached by entering a ‘script contest’ that is interested in everything.
      The script would be the final product, before actual production.
      The beginning would be an idea or concept, most likely pitched to an agent. If the producer is interested, the author would then be asked for a ‘treatment’, an expansion of the idea.
      There are sources about how to go about this.

      • CrazyCooter
        December 30, 2015 at 12:25 am

        If you will pardon my confusion, and I am a huge pan of posting to finance/economics blogs after a few pints (and regardless I am still a few million short of being eccentric), I really must pose the question:

        What are you talking about? I couldn’t follow.

        Is it an ad on the site? These things are quite sophisticated these days and no one sees the same stuff. I use AdBlock Plus and see no ads (sorry Wolf – I try to compensate with compelling commentary).

        I couldn’t see much in the way of movie scripts or books or business models related to either in the OP.

        Maybe I am a DB (Deutsche Bank – not, well, never mind), at, ahem, quite a loss, and need, well, bailing out here.

        Regards,

        Cooter

        BONUS: is that grammatical use of all those commas at the end there? It might be a record for me.

        • Jeff
          December 30, 2015 at 1:19 am

          I agree with you Cooter! I have no clue what the hell Nick Kelly is going on about! I did the same thing, scrolled back up the page to see if I could find out what he is talking about, no clue?? I guess that makes me a Deutsche Bank too!

        • Nick Kelly
          December 30, 2015 at 2:00 am

          Well so you didn’t see them. I did. There were ads for a script writing contest and ads for Max Keiser.
          BTW- there are a lot of ads for Keiser around, and I wonder who’s paying.
          Congrats on your ad blocker.
          Ps_ I can see why the script writing ad might be targeted to me, and not you, but I can’t see why they’d pitch Keiser to me.
          I think his ads appear on Stockman’s site too.
          I assume you have heard of RT and Keiser, who for some reason has quite a following in North America.
          BTW: applying Occam’s razor, the simplest explanation for your having no idea what I’m talking about is that you didn’t see what I’m talking about.

      • picobello
        December 30, 2015 at 3:02 am

        Welcome to the Internet in the year 2015 Nick, where you are being profiled by Google, facebook and god knows who to give personalised adds depending on the email content you get in your gmail, sites you visit, Google search terms you use etc etc. These are even linked to your phone and what sited you visit on your phone. Don’t worry you don’t need to have an actual Google or fb account as they’ll just make a shadow profile (if I have your phone nr in my phone with your name etc and I install the fb app, it will upload your phone nr, name, email address etc and they make a shadow profile. Next time you buy something online and fill in your name voila! They know it’s you) so that’s how you get personalised adds. There are some good vids about this on youtube, something about everybody being in their own Internet bubble, completely personalised, different content and adds. Most sited use Google adds and so Google just thinks you’re the kind of person who’s into writing (true) and a critic of today’s monetary system (well you’re on this site aren’t you) so I guess Google is doing a good job.

        • Nick Kelly
          December 30, 2015 at 11:03 am

          OK fair enough and understood. But these weren’t side pop- ups they were between paragraphs of the text, so I assume they are there with permission.

          BTW: once after surfing porn between real work I got a pop- up:

          YOU HAVE VISITED A PORNOGRAPHIC SITE!!
          PROTECT YOUR JOB YOUR MARRIAGE YOUR REPUTATION!!
          FOR JUST $10 WE CAN REMOVE ALL TRACES!!
          WE ARE AN AUTHORIZED MS CONTRACTOR

          I wanted to say good luck with that, but no doubt they’ve scared some poor dolt.
          To all replies to my rather long comment about scams, you weren’t rude just puzzled as I would be if I hadn’t seen the ad.
          But please pass on the word about The Vault – because even though RBC sicced Visa fraud onto them, they are still around.

        • Mary
          December 30, 2015 at 12:13 pm

          Useful explanation of how ads can be “tailored” to each of us based on all that unfortunately legal snooping done by social media.

          It can be fun, or alarming, to try and figure out how ads are chosen for your eyes only. My version of Wolfstreet is heavily populated by offers to test me for Alzheimers. But the creepiest: A couple of months ago, I accidentally turned on my Mac’s iSight camera and took a picture of myself. Since then a wrinkle removal ad has been rotating that has a crude line drawing of my face.

      • Robert
        December 30, 2015 at 4:17 pm

        But how do you get an agent if you have no published work?

        • Nick Kelly
          December 30, 2015 at 7:23 pm

          Not easy but it can be done. There are books and on- line advice.
          Remember that a real Literary Agent does not charge the author.
          Also fiction must be complete but non-fiction can be pitched as a project, with of course a clear outline and expertise in the area.

          Many successful authors collect hundreds of rejection slips before any luck. Steven King had thrown Carrie in the trash but wife took it out.

    • Nick Kelly
      December 30, 2015 at 2:10 am

      I tried to cut and paste a Keiser ad from a bit of text from the second or third post down but although the surrounding text appeared the ad was gone.
      I just think its odd that the Russian state is paying to advertise on this site whether some ads are blocked or not.

      • hidflect
        December 30, 2015 at 6:33 am

        Nick, your ads are different depending on your region, browser, OS and especially what cookies you have on your machine. It can be very disturbing to have an email conversation with someone about, say, controlling your weight through exercise and 10 minutes later see ads for dumbells cropping up in your margin. But that’s how it is unless you securitize your browsing.

        In part answer to your question, Max Keiser works for Max Keiser. He talks his book being a heavy investor in gold and is only trustworthy as far as he criticises the establishment but he (intentionally?) skips the details and goes full-doomer. He’s been predicting the Crash for 5 years. RT loves that kind of anti-Western screed so they give him a microphone.

      • Yoshua
        December 30, 2015 at 7:28 am

        I’m targeted by good looking Chinese women who wish to “date” me. Obviously these women know something too since they are prepared to pack their things and leave the “miracle economy” and move to Europe.

        • Thomas
          December 30, 2015 at 5:35 pm

          I get the same but from beautiful russian women. Are we being racially profiled by google or are they just datamining pornographic preferences.. hmm.

          And I’d like to add to the compliments on the great writing of Wolf’s blog. It has become a part of the daily browse for actual news, since I found it.

          For an add-free news site, counterpunch.org is highly reccomended: http://www.counterpunch.org/2015/12/30/bail-ins-begin-a-crisis-worse-than-isis/

      • December 30, 2015 at 5:50 pm

        Next time take a screenshot. That works. Click the “print-screen” key on your keyboard, then “paste” it into an image editor (like Paint, part of Windows). It shows your entire screen as an image. You can crop it down to the size you want. Then save it on your device as an image.

      • Red Flag
        December 31, 2015 at 12:07 am

        Thanks for your posts, Nick. I like reading all that about books, etc.
        I noticed the ads too….Max is wild, but we need his type of energy & irreverence. RT is a good news site, no matter who pays for it. Look at the c–p that HuffPo runs. An American has to work hard to collect news. This site is very good for less-political business analysis. Some of my more political posts get blocked, but it’s a great site with less trolls than most.

  3. Bruce Adlam
    December 29, 2015 at 11:13 pm

    The USA are to blame for the mess they find themselves in . they are the global financial Stuarts of the world .money must have a cost for same reason we work hard to earn it.A wise man once said to me never let an acountant run your business . here we have the Feds running the business and what a bloody mess they’ve made of it . the ZIRP policy has caused massive distortions . and wasted capitol will do more damage than what isis will ever do

  4. frederick
    December 30, 2015 at 2:38 am

    Nick Kelly the reason Keiser has a following is because he hates the big bankers and evidently so do many Americans

  5. MC
    December 30, 2015 at 5:18 am

    The Chinese banking system already gave proof of its ability to “improvise and adapt” around 2001, when an unknown quantity (several billions in 2001 US dollars) of NPL’s somehow disappeared from the books.
    The general attitutde in Beijing in the days was “Yes, we did. And it’s none of your business”.
    Nobody had any idea where these NPL’s ended up, if banks simply rolled them over and were compensated by the PBOC, if they were transfered in a vault in Shanghai and simply left there or whatever.
    This behavior had as many critics as admirers. The former saw it as yet another proof of China’s lack of financial transparency while the latter hailed this form of “creativity” as the way forward.

    Fast forward to 2009. NPL’s become a problem, again. This time Beijing took a different approach. NPL’s, chiefly those from sectors deemed strategic by central planners, were to be “ignored” and kept on the books.
    If China had no problems hiding to the world the 40 million workers laid off by factories whose overseas business had suddenly dried up (and whom were noticed only because commercial satellites took pictures of massive Hoovervilles sprouting in the most unlikely places), it was child play for them to pass this piece of legalized financial fraud under the radar.
    The world was well ready to ignore it, desperate as it was for an economic miracle. And China delivered, keeping analysts bamboozled with nigh on unbelievable paper growth figures.

    Fast forward again to 2015. Analysts took a massive slap in the face in June when the Shanghai and Shenzen stock markets crashed 40%. How was this possible, given paper figures emanating from the Red Mandarins in Beijing were every bit as good as ever?
    Suddenly people noticed shipping rates to and from China had been declining for months. Initially this was blamed on a glut in the supply of container ships, bulk freighters and oil tankers but the decline was simply too massive to be simply glut-driven.
    Years ago an HSBC analyst gave an interview in which she warned investors that China’s economy behaves according to a postulate to Heisenberg’s Indetermination Principle: the closer you look at it, the more it changes it behavior. To cut a long story short, once Beijing notices analysts are using an economic indicator to pin down the true rate of growth (or lack of therefore), that indicator suddenly shoots into the stratosphere. She didn’t accuse the Chinese government of downright falsifying numbers (she has a job in a bank very active there after all) but she warned to look at indicators the Chinese government has less opportunities to fiddle with.

    Sadly NPL’s are just one of those indicators Beijing can control. Over the past three years there have been timid attempts to at least come up with extimates. These ranged from “Not much worse than Spain and Italy, really” to “If we did this kind of accounting here, we’d end up in jail for fifteen years”.
    The reality is nobody, probably not even the Red Mandarins in Beijing, have an exact idea of how many NPL’s are out there.
    They probably have the exact numbers for the Big Four and a host of other State-controlled banks, but I suspect they only have a general idea about the immense number of local banks and probably no clue about the immense shadow banking system they created themselves to fuel the greatest malinvestment binge in history.
    And now that the deflationary wind has started blowing over China, servicing loans, especially the high interest ones so common in the shadow banking system, will become far harder.

    Allow me here a closely related digression. Many Chinese companies seem to have become desperate both to keep up margins high enough to service debt and offer to their foreign customers prices so low as to be irresistible. This is proving to be a very toxic combination, as I’ll show with the following example.
    Lately Chinese firms have started to pitch directly to retail sellers chainsaws which are direct clones (in appearance) of models from the most prestigious brands, such as Stihl, Husqvarna, Echo and Solo.
    Often these are sent with no-name brands but in the last year they started shipping saws branded as the genuine article, down to falsified (non-existant) serial numbers. This is counterfeiting on a scale previously seen only in clothing and fashion accessories. And a sign of growing desperation.
    We took apart a number of these saws over the past few years (you are lucky if you see 10-12 tanks of fuel out of them before they break down) and noticed a dramatic drop in build quality, the exact opposite you are expecting to see. Some of the latest saws from China are built to such sloppy tolerances you can actually move the piston around by poking at it with a toothpick through the exhaust port. For the least mechanically inclined, that’s not supposed to happen! :-)
    Just to give an example of what we are talking about here a Chinese-made farm/general purpose saw around 45cc displacement will retail at around 60€, and you often get a free spare chain with it.
    The last Stihl saw I bought in the same category retails for around 500€. A Swiss-made 3/8″ Stihl chain retails for 22€.

    These are not signs of strength.

    • hidflect
      December 30, 2015 at 9:43 am

      2 years ago, a colleague of mine in the office saw a company advertisement on a Chinese version of Ebay for an LED wireless mouse with a really cool design for $1. Shipping free, anywhere in the world. He decided “what the hell” and ordered one. 2 weeks later he got it. It worked fine. The package it came in looked like it was wrapped by a 4 year old. At that point I started to question the whole Chinese economy. There’s something seriously wrong with that country. Always was. Baked into the cake.

    • Nick Kelly
      December 30, 2015 at 12:55 pm

      If anyone had acted on the warnings of Ann Stevenson-Yang, given on a masterful presentation in Feb.2015, they could have done very well shorting the Chinese market.
      It’s something of a mystery how a real expert like Ann S-Y can say growth is flat to negative and more than 8 months later the BBC is parroting the CCP line- Growth Falls to 6.9%.
      Like Soviet and Russian propaganda, the CCP is clumsy. For years it’s 7- 7 -7.
      Skeptical?- ok it’s not 7- it’s 6.9
      It’s like a kid caught exaggerating- he walks it back a bit at time.

      • MC
        December 30, 2015 at 2:48 pm

        I shorted Shanghai in June. One of the most financially (and personally) rewarding things I ever did. ;-)

        The reason why mainstream media are parroting the party line (literally) is very simple: if a government is accused of cooking numbers for propaganda purposes, the cat is out of the bag. Every single piece of official statistics from every country in the world would not be immune from skepticism. Including those originating from the BBC owner.

        To this it must be added the appeal of central planning, as China still practices under the guise of Red Capitalism, is still immensely strong at all levels. I still remember the uproar when back in the 80’s somebody dared to criticize the numbers originating from Moscow, effectively saying they were propaganda intended for the consumption of credulous foreigners.
        I still remember a local businessman (despite popular credence the Iron Curtain was not impenetrable, especially to goods the USSR could not manufacture and hard currency it desperately needed) speaking of how stores in Moscow were ovestocked with glassware and fur hats but always out of stockings and shoes.
        I may have been young, but it sounded very wrong to me. Very much like a €60 chainsaw.

    • Kam
      December 30, 2015 at 2:40 pm

      The Chinese are shameless crooks- copying name-brand products with impunity. All under the watchful eye of the Chicom leadership who are always ready to slap down any scrutiny of their methods.

      One thing they have never been able to copy is quality. Everything they produce is crap. Some stuff a little crappy, most stuff all crappy.

      • Red Flag
        December 31, 2015 at 12:15 am

        The Chinese copy what the American corporate elites gave away. Also, the US patent system has become so predatory that no one can really invent anything here anymore…..the big corporations run the inventor out or buy him off. So, the innovation is cut off at the start. I can hardly blame the Chinese….when the real evil is right here at home.

    • d
      January 2, 2016 at 5:19 am

      “Fast forward again to 2015. Analysts took a massive slap in the face in June when the Shanghai and Shenzen stock markets crashed 40%. How was this possible, given paper figures emanating from the Red Mandarins in Beijing were every bit as good as ever?
      Suddenly people noticed shipping rates to and from China had been declining for months. Initially this was blamed on a glut in the supply of container ships, bulk freighters and oil tankers but the decline was simply too massive to be simply glut-driven.
      Years ago an HSBC analyst gave an interview in which she warned investors that China’s economy behaves according to a postulate to Heisenberg’s Indetermination Principle: the closer you look at it, the more it changes it behavior. To cut a long story short, once Beijing notices analysts are using an economic indicator to pin down the true rate of growth (or lack of therefore), that indicator suddenly shoots into the stratosphere. She didn’t accuse the Chinese government of downright falsifying numbers (she has a job in a bank very active there after all) but she warned to look at indicators the Chinese government has less opportunities to fiddle with. ”

      Long before her, a CCP official stated, that the only real indicators, were, electricity consumption, and rail freight movements. (Zero hedge broadcast electricity, until they couldn’t get it any more, the main reason I went there)

      Now you cant get that data, in a timely, or accurate manner.

      Currently china does not control enough of the shipping, to fudge the container, and dry bulk movement numbers, in and out. Currently.

      They are currently all that is left, to give a contra, to the CCP lies.

      America lies about is numbers sometimes as well, but they still get quietly, but publicly “corrected”.

      Not many sheep come to this blog, so we are really preaching to the converted

      “The CCP, is like the DLA, it dosent know where it all is, or how much, it, and its entity’s, have .

      Except within the DLA, its inventory, with the CCP, its debt. Both state, and non-state.” Me.

  6. Roddy6667
    December 30, 2015 at 9:38 am

    Perhaps the banks are in dire need of cash for deleveraging, and are dumping anything they can sell.

    • December 30, 2015 at 9:48 am

      That’s exactly what they’re saying out loud.

      But why are they dumping stakes in banks that operate in the second largest economy in the world, supposedly one of the fastest growing economies in the world, with huge and miraculous opportunities? What are they seeing that scares them to the point where they bail out of financial paradise?

      • Nick Kelly
        December 30, 2015 at 11:35 am

        The CCP is one of the few nominally Communist regimes that hasn’t been booted out or, as in Romania- stood up against a wall.
        After putting the Chinese people through the Mao era and The Cultural Revolution ( for which it has never apologized) it has morphed into a type of royalty like pre- Revolutionary France.

        My sister recently retired from Director of Foreign Admissions at at university. Some scholarships were made available to China- every one was taken by the kid of a party member.

        80 percent of China’s health care budget is consumed by about 8.5 million CCP members and families. The other 900 million plus, fight for what’s left.

        According to long- time China expert Ann Stevenson-Yang (see Feb. 2015 You Tube video) entire industries, aluminum, concrete, steel
        have factories running at a loss so a State-owned bank won’t have to report a sour loan.
        For all the hoopla about China’s progress, it was from a very low point, low because of the CCP.
        The other China, Taiwan, has a GDP per capita 300 % that of the Mainland.

        The CCP has to go- this place could have a second revolution.

        • Curious Cat
          December 30, 2015 at 6:22 pm

          CCP has to go? The last thing the world needs is another 1.4 billion people in revolution. Surely we should have learned that from the world’s recent experience in the middle east.

        • Nick Kelly
          December 30, 2015 at 7:46 pm

          To Cat: oh I far prefer it pass into the dustbin of history peacefully. But what is communist or even socialist about the CCP? It’s just an incompetent ruling clique, and has a major problem with the kids of the old guard, who feel, and are, born to privilege.

          Note I said the CCP has to go- there could be a second revolution.
          Maybe I should have said unless the CCP goes, there will be a second revolution.
          One recent comment from Ann Stevenson-Yang: ‘we are amazed how many analysts have bought into the idea of Chinese Exceptionalism’.

        • Curious Cat
          December 30, 2015 at 9:08 pm

          Nick – I agree the CCP are neither communist nor socialist. They are autocratic. But the Chinese lived under emperors for 4,000 years so they are used to absolute, occasionally irrational, rulers. Mao was just another emperor to the average Chinese of the time. The Chinese know “’tis folly to be right when the government is wrong.”

          I also agree the CCP is an incompetent ruling clique. But I wonder which current world government is not. None immediately springs to mind.

      • Kam
        December 30, 2015 at 2:44 pm

        Wolf
        It is all hidden behind the Chinese curtain- so foreigners must be kept in the dark.
        This rising tide is rapidly receding- fun to watch.

      • hidflect
        December 30, 2015 at 7:13 pm

        While living in Japan it was announced that China overtook Nippon to become the world’s 2nd biggest economy. The very same week there was a report that China consumed the same amount of carbon fuel as the USA. So at the time I knew that Japan’s economy was 1/3 the size of the USA which mean that China was therefore producing the same GDP as Japan but with an estimated 3x the fossil fuel usage. 7% growth doesn’t mean much if you disproportionally blow through finite resources to do it.

  7. chris Hauser
    December 30, 2015 at 9:54 am

    DB getting out is not an indication, it’s a decision. a good one.

    china has been a giant deflation machine for a long time, and now they’re doubling down. more of the same, worked before…..

    see the current wave of mergers and acquisitions, but consolidation and rationalization? no.

    as to the internet, it’s pernicious, there is no privacy anymore.

    • Kam
      December 30, 2015 at 2:47 pm

      chris

      “as to the internet, it’s pernicious, there is no privacy anymore.”

      Swamp Google with as much irrelevant crap as possible; therein is your privacy.

  8. Yoshua
    December 30, 2015 at 10:45 am

    What secret do Global Banks know ?

    A South East Asian politician said that the Trans Pacific Partnership (TPP) was written by International Banks and Transnational Corporations for International Banks and Transnational Corporations.

    The TPP text is still a secret for everyone except for the International Banks and Transnational Corporations.

  9. Jack
    December 30, 2015 at 11:08 am

    So China’s been “salting the core samples with gold dust” as Bre-X did in the 1990s–what else is new?

  10. walter map
    December 30, 2015 at 11:42 am

    These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people’s money to settle the quarrel.

  11. NotSoSure
    December 30, 2015 at 12:57 pm

    What secrets do the Chinese know about Merica? The fact they keep buying in places such as San Francisco and New York is making me question my belief about bad times to come. Plus the fact that the Fed is actually brave enough to raise interest rates (contrary to my expectation) is really making me question my world view.

  12. Shawn
    December 30, 2015 at 1:07 pm

    Now I know why the Chinese are scrambling to get their money out of Chinese banks and pile it into real-estate in the US and Canada. As always, great article.

  13. B Kowal
    December 30, 2015 at 2:12 pm

    [1] “They’ve seen a thing of two behind the scenes. They might not have accurate data of just how big the piles of non-performing loans in China are, but they’re getting a feel. ” Well, they real do have accurate data on non-performing loans, and that’s why they are selling before year-end, so they can tell shareholders that they were aware and took action. Smart move by management, good CYA action. [2] Hey, Wolf! Are you really from Deutschland? Your blog ist ganz besonders gut!

    • December 30, 2015 at 2:16 pm

      Ja! (but all Germans laugh when I speak German).

  14. B Kowal
    December 30, 2015 at 3:54 pm

    Sie immer schreiben und sprechen die Warheit. Ein Held. Wohl auf , Herr Richter! Prosit Neujahr.

  15. Al Tinfoild
    December 31, 2015 at 9:25 am

    Does the announcement yesterday of China outlawing currency trading by foreign banks (was that it?) have anything to do with DB getting out asap? The move by China was painted as an attempt to stop capital flight.
    Or is DB getting out before the failing economy of China (and the failing world economy) decrease the value of DB’s holdings in China? Or did DB hear that China is about to disappear or suicide some bankers?
    Or is DB scrambling to shore up their balance sheet because of fear of bad tidings in the EU or US?
    With China devaluing the Yuan so sharply, maybe DB just wants to get out before it is devalued further.
    Or maybe DB fears a bail-in imposed on their holdings.
    With economic affairs so unsettled, everywhere, and with everyone making up numbers (China claiming 6.9% GDP growth, the BLS claiming 5.1% unemployment, etc.) we might do as well to consult a Swami or Ouija Board.

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