Chinese policymakers have been engaged in a gargantuan effort to switch their export-dependent economy, reliant on volatile international demand, to another engine: consumer spending at home. At the same time, they are battling to bring more competition and free market approaches to stodgy state industries; and to tackle the legacy of an unsustainable borrowing binge, including bubbles in the property and stock markets.  These would be a formidable set of challenges for any political leaders, and while the state of the Chinese economy is hard to assess, a number of warning signs have been flashing, including a share price plunge on a scale reminiscent of the US’s 1929 Wall Street crash and most recently, an 8.3% drop in exports in July.  Official figures show GDP growth in line with Beijing’s 7% target; but Fathom’s analysts, who study other measures, such as electricity usage and freight volumes, say it appears to be closer to 4%. Britton describes the depreciation as “China, doubling-down on its bet,” and warned: “If we are right about the hardness of the landing they’re facing, you ain’t seen nothing yet.”  Adam Posen, of the Peterson Institute of International Economics in Washington, says China’s motivation may only become clear over time, but markets will be asking themselves “is depreciation a side-effect of liberalization or is liberalization cover for devaluation?”  But whatever the reasons behind it, Beijing’s economic gear shift will have far-reaching effects. Not everyone is as apocalyptic as Edwards; but he believes the new wave of deflation emanating from China could “overwhelm already struggling corporate profitability and take us back into outright recession”.  “As investors realize yet another recession beckons, without any normalization of either interest rates or fiscal imbalances in this cycle, expect a financial market rout every bit as large as 2008.”

The faceless money men invent billions of Euros at the press of a button to lend the the Greeks - when (not if) they default, real Greek assets - gold, mortgage books, land, will have to be handed over as "repayment" - good business if you can get it. The Greeks will not be allowed to default until the country is stripped bare of all assets. This is the monitory system we now operate - money as debt...Please note that the Germans have "tabled the idea of a second €5bn bridging loan in order to extend talks with Athens. " The idea being to show the German taxpayer that all non-EZ countries will be forced to subsidise what is a solely EZ problem in order to save the blushes of Frau Merkel, by once again using the EFSM. As per usual we will hear all sorts of nonsense about how they are protecting the UK taxpayers' money by... giving more of it to the EU. At what point will they realise that this is all they want the UK in the EU for, money and nothing else. All of the nonsense that Cameron et alia spout about the UK being at the heart of the EU is worthless, it is time to leave this fatally flawed institution.  How the supposedly left wing anti-Capitalist Greek government cannot see this I do not know. Defaulting is the Greeks' only hope - but they will not be allowed to.  The biggest victim of a cut in Greek defense spending wil be the German armaments industry who foisted their goods on the country in the first place. In fact the whole of German manufacturing will be affected by guts in Greek spending. Why don't the German banks just cut out the middle man and just buy German goods directly rather that go to the bother of lending the Greek government money which ot just gives to the population to buy German cars and then take a hair cut on the loans! It's a pretty old trick. Disguise the real problem by burying it inside a pile of bullshit.  It's fraud and if any euro country accepts the terms of this fairy story, they are guilty of financial deception.  This is such a shameless distortion of monetary discipline that the perpetrators can have no possible creditworthiness in the governance of the European Union, and if the Chinese wish to waste their currency on the Greek problem, more fool them  And they are no fools, so I don't believe the scaremongering put about by the Americans....The Greeks are playing another blinder here. The EU and their stupid qualified majority mechanism are poised to repeat their earlier blunders - again. Do they really think that Greece is ever going to be a successful eurozone member? Of course they don't, they just can't stomach the thought of the euro being reversible. Whatever they are doing for Greece it certainly isn't out of any sense of goodwill towards them.

Airbus has won a patent for a hypersonic passenger plane, but Concorde’s hydrogen-powered successor is unlikely to leave the drawing board any time soon.  The proposed airplane would cut the journey time from Paris to Tokyo from 12 to under three hours. The idea, first published in 2011, is to use three different kinds of engine power to jump above the atmosphere while still using regular runways for takeoff. It has now won approval from the US Patent Office.  The concept comes as commercial space companies such as Virgin Galactic pursue plans for low-level space flights. Airbus’s proposed plane has “gothic delta wings” that echo the elegant curves of Concorde ... But Airbus dampened any hopes of a quick return to the days of the Anglo-French supersonic jet, which was taken out of service in 2003 owing to high operating costs.  “Airbus Group and its divisions apply for hundreds of patents every year in order to protect intellectual property,” a spokesman said. “These patents are often based on R&D concepts and ideas in a very nascent stage of conceptualization, and not every patent progresses to becoming a fully realized technology or product.”  By climbing almost vertically, the new “ultra-rapid air vehicle’s” designers hope to avoid the supersonic boom that hampered Concorde’s deployment beyond the North Atlantic, where it flew at twice the speed of sound for more than 20 years.

FOCUS ON  PORTUGAL - The imbalance of the Euro between rich and poor countries has acerbated and wrecked the Portugese industries of tourism, and of clothes and shoes from cheap Chinese imports into Europe. The debt is unsustainable and to add any more austerity simply makes it worse. It will, along with Greece, need a massive debt forgiveness to solve its problems, and this will happen as sure as night follows day, and Merkel and Germany will have to swallow it whole.  I should mention the accelerating decline in the population, and particularly the working age population who actually pay most of the taxes (when they can find jobs that is). Since population size is a significant indicator of GDP ( eg less people equals less demand for all sorts of goods and services from food to haircuts, housing and furniture to put in it etc) this is going to be perhaps the major long term issue for Portugal.  This is driven by two factors. The first is that birthrate has been barely half that required to maintain a steady population level for the whole of this century and the second is substantial emigration, especially of graduate level young people who also happen to be just in the age range that provides the majority of children. For a short while the increasing longevity the large number born born from the 1940's to the 1970's is masking what is already certain to happen. But we already know the number of people aged 0-20 years old is barely half that of a generation ago and its thus inevitable that there will be a totally unavoidable drop in the working population for at least the next generation and also because there will be far fewer 20-40 year olds in this period there will also be yet again even fewer children born to them. When you add in the high level of immigration to this the numbers are truly frightening- well they should be if any politician cared to take notice!  Demographics is a much ignored and yet very hard to reverse adverse trend that is going to have an unavoidable impact on many European countries. Portugal is probably the most critical but Italy, Germany and to a lesser extent Spain are all going to have a chronic problem emanating from this for decades to come...THE FACT that the IMF is still working with Portugal is a good sign. I just wonder if Portugal could get the same interest rates and terms that Greece is being offered if its debt situation would be so dire. For example, the Portugese government could, much as China is trying to do, consolidate debt and rationalize industry through debt exchanges with the Central government offering low cost loans to solid Portugese companies to take over the zombie firms or refinancing consumer and business loans.

At the moment the Greek government receipts are used to pay for  pensions and public salaries. Afterwards there is practically no money left to pay for social, health, education, traffic, communication,  military etc.  All these items are paid by credits from partners. Interests and debt  repayment is only done by partners.  Without a "haircut" on pensions and public salaries Greece has not even a slight chance to survive..."To relieve the present exigency is always the object which principally interests those immediately concerned in the administration of public affairs. The future liberation of public revenue they leave to the care of posterity." -Adam Smith, The Wealth of Nations (1776) 2010. Greece was about to default on its debts. As usual, politicians and bureaucrats blamed everyone but the perpetrators — the politicians and bureaucrats. They claimed that the only way to relieve the crisis of debt was debt itself.  Problem: An excess of borrowing behavior by Greeks.

Goal: To have saved the Big Banks, mainly in France and Germany. Plan: To allow Greeks to default to non-banking creditors; have the European Central Bank and International Monetary Fund lend even more money to Greece in order to give Big Banks time to rid themselves of basically worthless Greek debt; then, when Greece finally defaults, charge the taxpayers in the European Union, that phony paradise of united social democracies, for the losses to the ECB and IMF. Measurement: Success for bankers, bureaucrats, and politicians. Failure for taxpayers. There were alternatives more fair and just; for example, see "Debt & the Race to the Bottom" at ... http://nationonfire.com/catego... In 2015. Greece defaults. Consequence? Another rescue from the EU in exchange for more Greek promises.

B.S. de jour...

Spain emerged as the best performer of the eurozone’s big four economies last month as the single currency area largely shrugged off the impact of the Greek debt crisis.  The latest health check conducted by the information services company Markit showed the pace of activity across the eurozone eased only slightly during the weeks when Greek banks were closed for business.  But the survey found no signs that the eurozone was about to slide back into recession and, with Spain leading the way, was consistent with growth continuing at about 0.4% per quarter.  However, the fragility of the recovery in the 19-nation group was highlighted by data from the EU’s statistical agency, Eurostat, showing a 0.6% drop in retail sales growth in June.  The drop in spending was sharper than the financial markets had been expecting and cut the annual growth in retail sales from 2.6% to 1.2% – its slowest pace for nine months. Jack Allen, an economist at Capital Economics, said the decline in retail sales growth from 1% in the first quarter to 0.3% in the second quarter suggested that the boost to consumer spending from the collapse in oil prices late last year had started to fade....Spain’s return to growth is the result of the performance of its services sector, with the Markit survey showing output in recent months back to levels last seen when the economy was booming in 2006. The services PMI rose from 56.1 to 58.7 last month.

All kinds o BS from the delapidators in Brusells...

Greece is close to reaching a deal with its creditors to secure a €86bn lifeline that will keep it afloat for the next three years and secure its place within the eurozone, according to the country's prime minister.   As shares in Greece's benchmark index continued to plummet, Alexis Tsipras said meetings between the government and Greece's creditors had made good progress.

"We are in the final stretch," said Mr Tsipras. "Despite the difficulties we are facing we hope this agreement can end uncertainty on the future of Greece."   Greek bank shares plunged for a third day on Wednesday, after the end of a five-week shutdown sparked the biggest stock market drop on record.  The Athens stock exchange closed down 2.44pc at 643.86 on Wednesday, after falling by as much as 4.4pc, while an index of the country's top four banks fell 25pc to 246.50.

Bank shares have now fallen close to the maximum 30pc allowed for three straight days.

 

Point 1: discussion of debt relief is a red herring. At the primary level - ie: before ANY debt service is accounted for - Greece is very negative: tax collection 25% below budget, no state suppliers have been paid since 7th March, GDP falling rapidly. Until the basic economy is managed properly, any debt service is academic.

Point 2: the banks are very bust. 55% of their 'capital' is Deferred Tax Assets - which everybody knows is phoney capital: it only has value if their future is profitable, no value on a winding up. Non-performing loans are declared at 50% but in reality are much worse. Banks are deliberately refinancing dead loans in order to make them appear 'performing'. The market knows this: the four bank shares were suspended 30% 'limit down' on Monday, Tuesday and two of the four are already suspended again today (Eurobank and NBG managing to remain above suspension so far Wednesday by way of two token €2m buy orders).

There really needs to be a bankruptcy process for a country, like Chapter 11 for corporations. Bailout 3 (if it happens - which I doubt) will simply pour more money down the drain, failing to address the above issues thoroughly.