leak2Water in the mine and fire in the hole

We may be reaching the point where combined politburo and PBOC ops to stem sell-mania in the Shanghai markets are running out of laws, restrictions, cash and ideas. Yesterday was a terrible day on the world’s bourses, and overnight the SSE Comp dropped 1.9% despite the daily dollop of support after lunch. The Slog suggests that a second global correction is on the horizon.

Lots of people in the West see China as “past the worst”, but every data chart that emerges proves them wrong. They also underestimate the sheer amount of pit-props being applied to the Shanghai ceiling. Put the Shanghai and Hong Kong markets side by side, and the degree of manipulation will, at times, be obvious.

The Hang Seng (Hong Kong) Index does strictly come under Chinese tutelage; but unlike the Shanghai markets, the HSI is majority owned by HSBC. Far be it from me to suggest that HSBC is a paragon of verité, but the Hang Seng records the fortunes of 58 HK concerns not in receipt of People’s Bank of China junk-buying subsidies: thus, it reflects reality far more than the Shanghai Comp….on the grounds that even the Libor rate is closer to reality than the Shanghai.

This simple comparison makes the point from yesterday (Thursday):

ShangvHK24915Note how both head for the sewers in the morning, but whereas by the close the Hang Seng winds up – after weak rallies – below its morning losses, the SSE Comp finishes the day in positive territory. The difference is obviously the PBOC bringing more fingers to bear on more leaking dykes. Yes, I do realise that dykes and pit props make for mixed metaphors, but that’s not important right now.

Gradually – and it will soon be a lot less gradual – the major world markets are factoring in this falsehood, and adjusting their expectations accordingly. More dire Chinese slowdown data and gloom about commodity prices, once added to this, produced yesterday’s pretty awful performances by the Dow, the Nasdaq, the FTSE100 and the DAXI

downasdaq24915FTSE10024915The Dow is now closer than ever to the 16000 correction point, while the FTSE spent much of the day below its 6000 equivalent. Even with billions of Yuan thrown at the Truth, the Shanghai Composite is this morning  only 80 points above the 3000. Projecting a level without the PBOC spending spree, it would be at or near 2000 by now.

No doubt today some kind of “rally” will occur to take us into the weekend, but the trend is now more clearly in place than it was during midyear 2008….for those who want to see it.

As I posted last night, for those who’d prefer that we don’t see it, there are endless weapons of mass distraction. I do not believe that they invent them, but I do believe they exploit them – pace the classic Blairite Whitehall email, “Bearing in mind the media dominance of yesterday’s attack on the World Trade Center, this would be the maximal moment to release bad news”.

George Osborne takes hare up the arse, gold falls to 15p a ton” may not represent a conspiracy, but it is a very fortunate coincidence. Except for a hare that’s long in gold.

Connected from two days ago at The Slog: The gathering intervention of reality


  1. Meanwhile Janet Yellen is still talking about raising rates while also talking about negative interest rates as an option as well. Am I confused or what? Maybe that is why she had the dizzy spell while delivering her most recent address on ‘How the FED is going to fix it!! Personally, I Albert Edwards makes more sense than the frantic nonsense coming out of the authorities.


  2. So how is HSBC doing? Is it bankrupt enough to prop up RBS by leaning against it from the other side, so stopping both from collapse? Is HSBC another piece of news that the media have somehow forgotten?


  3. Do remember that the banks make their profits from derivatives and the like where they borrow VERY CHEAP money. Without cheap borrowing rates, the banks go under. That takes the US and UK economies with it, both of whom are wholly dependent on banking.


  4. Sorry Gemma, you should worry about Deutsche Bank and its derivatives book first. To VW add Glencore. Of course, I would agree that it’s all the fault of their dumb US acquisition: Wankers Trust.


  5. But isn’t this the point? Aren’t those derivatives held in their wholly owned British subsidiary?

    Sure, it’s a problem for Germany, for the Deutsche Bank… but it’ll leave a large hole in the UK economy too. And I know who’s tougher on banks, and it ain’t Britain.


  6. Poor dear Janet Yellen is right to feel unwell. In other times we might have plucked out her entrails out to see how they look, but I think ‘dizzy spell’ is enough of a forecast.
    It’s our own silly fault though. We imagined that the old rituals would always work, even when it was clear that they were making things worse. We have foolishly surrendered our own economic decision-making power to this monarchical financial power. We allowed the central banks and in particular the Fed to become the only effective economic agents. Their prolonged QE and money printing has completely faked values and falsified markets, and has centralised all economic power into their hands. Now we are sitting on our hands feeling helpless. Unlike the Wizard of Oz, Yellen is not invisibly tweaking the money supply unseen behind a curtain, but very visibly and so ever less effectively. Since we are all able to watch her and see her high priestly efforts becoming less plausible, we are bound to lose confidence in her rituals. Of course if no one takes bold decisions about the future, the loss of confidence may become quickly self-reinforcing and universal. Sadly I think we will have to make a sacrifice of her and the Fed, and splash some banker blood around to appease the angry proles. Of course many on Zero Hedge believe that this is just what our financial oligarchs want. If proles bathe in blood, it would bring prole numbers down and release their assets.
    It is sad when the old gods die. Still, economics is always about human sacrifice, one way or another.


  7. WO threatens Germany / EU, we will swamp you with migrants. Germany calls their bluff – they get swamped!
    WO threatens Germany / EU, we will destroy your Auto industry. Germany calls their bluff – Auto industry down the tube!
    WO threatens Germany / EU  to tow the line. Germany calls their bluff – they get atomic bombs distributed at key sites throughout Germany!
    JW, what is going on!


  8. Germany is the pivot point of Europe. It is the final trade terminus from China via Russia to the West.It must be dissuaded from joining with Russia ,its natural trading partner for centuries.
    This is the US neo-cons nightmare.
    The defection of Germany from under the US umbrella is the endgame of US Empire. Best place nuclear weapons there and make it a target.
    Double whammy, Russia and Germany both become targets of each other. Washington sits back and lets them stew.
    Merkel is between a rock and a hard place.


  9. Well, you see, it’s all to do with German corporations having to pay taxes in Germany… why should a corporation pay taxes when it’s their money they’re paying their taxes with??? That money belongs to the corporations, full stop. It does not belong to the German government!!!

    How many times do the US have to tell the Germans to get things straight?

    The EU was set up in the 1950s with the sole intent of ensuring that corporations who make money get to keep it.


  10. No thoughts on this, OAH? I thought you would know this kind of thing.

    After all, if a bank gets into trouble in Germany, it’s handcuffs. It wouldn’t be laissez-faire London where the banks get to play in the sandpit – sorry, that should read “stockmarkets”.


  11. Pingback: TGIF: That was the week that was… #PigGate | PoliticalSift

  12. Tell that to the offshore tax scofflaws facing workdwide AEI come 2017/18……. unless you happen to have your IBC in good ole Joe Biden s manor of Delaware where of course things will carry on blissfully as before , as they will in most US states fzmous for lax fiscal continence.


  13. It’ll be much bigger because the Mainstream Media know that everybody’s either owned a VW or knows someone who has… really newsworthy stuff to get those shed those sheets off of the newsagent’s counters…

    … and all the while…


  14. Delaware is the fraud capital of the world, isn’t it? How many companies have been registered in Delaware with “Donald Duck” as their owner??

    And it would be nice if you wore your reading glasses when trying to type, the spelling errors weren’t very funny: I read your comments to have a laugh at the Anglo-Saxon view of Germany!


  15. @ Gemma,
    Merkel lived under the totalitarian Soviet Union
    Russia is now a young democracy, with many faults, but with no designs on Full Spetrum Dominance, or beliefs in Exceptionalism or hegemonic ambitions.


  16. Salford Lad! “but with no designs on Full Spetrum Dominance” – you’ve not been reading the right newspapers, mate! The entire point of the MSM is that you should believe that Russia is for Full Spectrum Dominance.

    Thinking like yours means that the USA has lost their #1 enemy!!!

    Why bother with MH17 and all those sanctions against a country – when it’s little more than a tame lapdog???



  17. There are many complex ramifications of the VW issue.

    The software is able to detect when the car is under test and the car then goes into ‘test’ mode and runs clean. Examine the motivation – why not make it run clean all the time? If it can run clean under test then surely just make it run that way permanently. Clearly the car can’t – either the engine would sacrifice power or run too hot or use gallons of AdBlue, so what we have here is millions of cars that potentially are no longer fit for purpose. If I was the owner of one of these affected vehicles I would expect nothing less than VW repurchase the vehicle – given that the emissions data forms part of the prospectus upon which the vehicle is purchased in the first instance you would have a clear case under the sale of goods act as the vendor has intentionally misdescribed the goods for sale.

    I am sure there are lawyers filling their fountain pens at this precise moment.


  18. Just say I purchased my VW on my credit card and its deemed to be not fit for purpose and has contravened the SOG act ,would the bank then have to own the problem?


  19. Geli meine dicke Konditerei

    Gruss Gott!

    Operation Barabarossa on zat date vudd be far too spat: remember unsere geliebter Fuhrer who said, “Invade in Oktober, und for you Korporal, ze war iss over”. Vize vords von Dolfi. Zey say Churchill voss vize, but Hitler – now zere was one vize man…zo vize, Ich weiss’ nicht how he lost ze vor.


  20. Und jetzt my little Lied
    you are thinking of Anschluss zwei? Dolfi again: “Nein, nein unde immer nein! / And zat makes 27, plus the zwei makes 29.


  21. Dear Dean
    Are you the Dean Ditchburn that used to play left-wicketkeeper-three-quarter scrum-striker in midfield for Tadcaster Villa in the Rover Comic?


  22. Gemma
    I doubt very much if a Fraulein of your tender years was alive in the 1950s, but I was and I seem to remember it consisted largely of baldy Eisenhower putting on the White House Lawn, De Gaulle saying “Non!” and Herr Adenaur who always ‘ad an ‘our’s nap in the afternoon saying “I knew nuzzink”.

    The Glaser family who “bought” haha Manchester United are registered in Delaware. It’s a bit like Luxembourg only without the rules.

    By the way, we all read your comments to check if you’ve taken your medication.

    You see, anyone can be rude. Please don’t be: it doesn’t help anyone or anything.


  23. Sally la’
    If Germany is the terminus, which bus do I get in order to enjoy Merkel Rock n Hard Place café stew? It sounds scrumptious.


  24. Jon
    Being bigger doesn’t make something more important. I agree the Volk’s Wagen could be heading for its second scandal in 80 years, but to be honest I think somebody soon will move to stop it getting silly. After all, EVERYONE in the sector has been at similar scams for years.


  25. Geli pleess stop wiv dis schon
    George is more of a katzenverrabogabyzeSee sort of chap. He likes big black Jugs and lashings of white powder.


  26. Well now, thanks to a lot of activity on my garden, I need very little by way of medication.

    Just because my ideas are left field, as the Americans have it, doesn’t mean to say they’re totally batty.

    And do please remember I suffered YEARS of direct slander, abuse, and downright rudeness right here on the Slog – and all you could say was that you didn’t know which was me and which not – despite its being obvious what was going on to no few others.

    But I will attempt to abide by your admonishment, but please remember that I am human.


  27. @ liebling Johnny .

    I sm not your thick pastry or even your personal cake shop !

    Although nif coourse I could be if you gave me the merest encouragement …….

    As Jennifer Rush who translates badly into Germsn would sing :

    ” Weil ich Ihre Dame Und du bist mein Mann
    sind Wann immer Sie für mich zu erreichen
    Ich werde alles tun, was ich kann,”

    Something to dream about mon petit Napoleon.


  28. @ Mr Ward ( of Court)
    Indeed yes. In fact are there not now 29 satellites ( sorry states) which mske up our giorious EUSSR?

    For us Germans Lebensraum is always a temptation
    that has never lost its attraction especially as we prepare to welcome 500 thousand new economic jihadists every day into the Fatherland . Actually Switzerland whilst not vast has other ( financial) attractions . You have given me a germ of an idea ……


  29. Johann liebling,

    You have in completely flummoxing me succeeded in the understanding my own vernacular of.

    Never was I required even in my Ostdeutsche salad days to master the meaning of katzenverrabogabyzeSee…….

    I have of course heard of your CasaBellaNovaByTheSea…… is this similar but without cats ?


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