2017-12-14

Bitcoin Is One Sliver of Revolutionary Change

Cryptocurrencies are not only a story of finance and technology, but also the fracturing of nation-states in a time of declining social mood.

Bloomberg: Bitcoin Is a Bit of a Miracle at Any Price
One striking feature of bitcoin is the sociology of its acceptance and promotion. There is a small coterie of people who have mastered the details of its operation, and ownership is quite concentrated. You can take that as evidence for a manipulative clique and thus a bubble, or it may be a sign that the price could yet rise. I am regularly struck by how many people, including business sophisticates and my professional economists, have little idea how bitcoin works. They seem to have no interest in buying it, but perhaps that will change, if only through their pensions and mutual funds.

The real story of bitcoin is a heartening one of community. Less than 10 years ago, the bitcoin asset was worth virtually nothing, but a small group of people believed in it and worked tirelessly to promote it, and now the whole world is watching. It’s a tale at least as old as Christ and the Apostles. Maybe the bitcoin believers are as much of a miracle story as that of the brilliant inventor Satoshi.

The thing is, I don’t always believe in miracle stories of community, not in these days of declining governance and possibly fraying social order. Yet I’ve become emotionally involved in tracking the bitcoin price, perhaps because I realize that if one such miracle of “ex nihilo” creation can be sustained, others are on the way. I don’t think bitcoin is a bubble, but every morning I wake up doubting.
Many communities and nations will be born in the coming centuries, if not the coming decades. Cryptocurrency is one expression of an online community. Next will be law, and then digital land. New diaspora tribes that transcend borders will rise, perhaps eventually staking a claim on soil, a floating city, or a space colony.

China Sources

Marginal Revolution has a good post on sources for China: How to understand modern China

One of the links goes to an extensive source list: SupChina Sources 2017

China Macro Dump

Nothing shocking in the numbers. Slowdown in data still in effect, although it moderated in most cases.

November SOE fixed asset investment as a share of total FAI was the third highest percentage in 2017. It was only one of three months that exceeded 37 percent. (The low was 35.2 percent in March.)

All data from NBS or PBoC.

150 Cities Pass Real Estate Restrictions in 2017, Ren Zhiqiang Doesn't Know When Market Rebounds

How's it working out?

iFeng: 今年超百城发布150余次调控政策 效果如何?

On the plus side, inventories are down:
E-House Real Estate Institute released data show that as of the end of October 2017, the 80 monitored cities in new commercial housing inventories totaled 394.9 million square meters, a decrease of 2.1% year on year reduction of 10.1%, year on year decline has been 27 months in a row . Reporters noted that 80 cities in the four-tier cities account for more than half. Comparing historical data, inventory scale is equivalent to the level of August 2013, that inventory down to the size of four years ago.
But there are still sales troubles in fourth-tier cities:
However, the "four-tier cities housing stock situation is very different: there are industries rely on and near the hot spots of the city, there is a certain appeal to the population, the market demand; and there are many cities in the past due to the blind development, resulting in not a few real estate sales difficulties. "Ouyang Jie, senior vice president of Metro Holdings said.
The focus for 2018 is rental properties:
This year, much to accelerate the establishment of hire purchase both the housing system as a long-term mechanism to improve the force point. At present, China's rental population is expected to hit 190 million people, the size of the rental market exceeded one trillion yuan. According to incomplete statistics, as of now, the country issued a new policy of leasing the city has exceeded 50.

- Multiple ways to increase lease land. Recently, the Shanghai, Guangzhou, Shenzhen, Hangzhou, Zhengzhou and other cities have opened "rent not only sell" land sales model, most of the land by the state-owned enterprises went for a "zero premium rate." With the policy of the Institute of Statistics data show that as of the end of November 2017, the country's major cities listed oriented housing land lease for a total of 26.

- encourage leasing companies to large-scale, professional development. Hangzhou suggested that about 15 selected a certain size, brand housing rental housing rental business as a professional pilot. Chengdu, Shenyang put forward, and strive to 2020, the cultivation and development agencies, the scale of not less than 50 leasing companies; Hefei, Xiamen expressed support for the rental business bigger and stronger through mergers reorganization.

- financial factor to promote the development of the rental market is taking shape. Recently, the first single central rate rental housing REITs class products by the Shanghai Stock Exchange for approval. CITIC Bank (601998, stock it), China Construction Bank (601939, stock it), Bank of China (601988, stock it) and other banks recently are announced to give rental housing financial support, including consumer credit support for financial support enterprise end and the personal ends.

Insiders said the National Development and rental market unprecedented efforts, follow-up needed to accelerate the construction of rental housing legal system.
Ren Zhiqiang isn't making any prediction about 2018, saying the government-market cycle is broken:
For the past regulation period, is summarized Ren, "(it) prices, most non-virtuous circle relationship. That is when the market is at a low ebb, the government has taken some startup (stimulus) measures, then (the market) began to enter the madness stage, before you start regulation after regulation and finished into the doldrums, and then start again the regulation, which is macroeconomic policy in history, and most of the cycle is repeated. Therefore, prices must enter the madness inside a certain stage, then low tide, and then start this time no one knows will not start up again."

Ren told reporters in the 21st Century Business Herald interview also said that, due to uncertainties more, and this time, he is a bad judge the future market trend. Sun Hongbin, chairman of financial innovation in China also agreed to the first half, but for the future, Sun Hongbin more optimistic. Sun Hongbin said, "2018 will be better than 2017."
His prior recovery call in September 2015 (made in summer 2014) was close enough for horseshoes, hand grenades and macro.

2017-12-07

Emerging Signs of Chinese Credit Growth Slowdown

Markets are starting to price in slower Chinese growth. Or another view, the hope that an exit from post-2008 stagnation was underway is starting to fade.

ZH: China Commodity Carnage Continued Overnight As Brexit Fears & Bitcoin Cheers Dominate
Energy markets have been relatively quiet amid a lack of drivers, although WTI crude futures are off worst levels and just about reclaimed the USD 56/bbl level to provide some mild reprieve from this week’s product inventory-triggered pressure. Gold and copper were also uneventful overnight with the former stuck near 4-month lows as participants await this Friday’s key-risk NFP data. The main mover in metals markets was Dalian Iron ore which crashed by 7.5% amid ongoing demand concerns from China.

But Chinese stock weakness spread to the commodity markets - which had promised so much growth previously - as Reuters reports, China’s commodity exchanges have hiked transaction fees and margin requirements for a range of futures this year in their latest effort to curb speculative trading that Beijing says has spurred recent price surges in markets from sugar to ferro-silicon.

As Bloomberg's Mark Cranfield notes, China's iron ore future is doing it's best to shock global markets in the way copper did earlier this week. Partially thanks to top miner Vale SA, the metal is having a high volume swoon on the Dalian exchange, which could be the tipping point for another commodity complex slide as Europe gets going.

2017-12-06

The West Is Being Carved Up, Occupied and Sold to Highest Bidder

Australia is the front-line for the West's engagement with China. And things are not going well, if one wants there to be an independent West (or even Western civilization given demographic trends) in 100 years:

At Macro Business: Beijing knows exactly what it’s doing Downunder.
It starts with opinion from a strategic analyst:
Third, we need to push for greater reciprocity in our relations with China. This is easier said than done because our two systems mean Chinese are permitted freedoms here that are denied to Australians in China, including in business and commerce. For example­, foreign companies can only invest in Chinese cloud businesses with local partners while Chinese competitors are not subjec­t to the same restrictions.

Fourth, foreign, trade and defence­ policy must be recalibrated and fully joined up if the strategy is to be efficacious, which is one reason why the idea of a quadripartite dialogue with Japan, India and the US has renewed ­appeal. Contrary to its critics, this is not a mutual defence pact or an Asian NATO designed to contain China. China is not containable and none of the dialogue partners has any desire to sign on to such a futile endeavour.
The right and left in the West have two strategies for dealing with China right now. The left's plan is colonization. They are using subversion through foreign students and NGOs to push American progressive ideology into China. The Chinese have clamped down on Western NGOs, cultural influence in movies and TV, ideological threats in textbooks. The problem for China is, it Cannot Fight Cultural Marxism With Marxism. China is "open territory" for anyone pitching a religion because the communists wiped out tradition, but didn't replace it. The result is China doesn't fight fire with fire, it uses state power. It gets in trouble for jailing feminists. It is headed down the same path as Russia, except Russia has Orthodox Christianity. That might not avert a kinetic war with the West once progressives have power again, but it opens the door to rapprochement with the West if there is a religious revival. China lacks such a link. It is on a path to war with the progressive West. (A recent headline along these lines: Chinese Researchers Experiment With Anti-Gay Spray)

The establishment right in the West is globalist, and therefore cannot confront China's soft power. Back to the Macro Business article:
Sensible enough but way too many motherhood statements. It’s too top down when China’s soft power push into Australia is also bottom up. For instance, if Australian property prices become dependent upon Chinese capital inflows then the risk is that personal wealth allegiances shift towards it no matter what a few spooks want. Likewise in universities and other services sectors that use cheap foreign student labour.

There is also the crazily high immigration intake which is importing a larger Chinese community and expanding its influence (which is nothing against them as individuals or ethnic Chinese).

But if we want to bulwark the nation’s democracy then these grass-roots influences must each also be addressed directly:

cut immigration to more manageable levels (at least half);
police foreign buying of property properly and implement global anti-money laundering rules pertaining to real estate;
promote new codes of practice for academic freedom;
revisit foreign student working hour provisions.

And on it goes.
Chinese immigration increases GDP and therefore is good according to the establishment right. It has no plan, but since the American right it is willing to confront China militarily, that's where it will find common ground with progressives (as they have with Russia). The risk of military confrontation will only increase over time...until there are enough Chinese in the country, or it is inextricably linked economically, such that confronting China becomes too difficult. And if a confrontation with China is necessary at that point, the costs will be far higher because it will risk economic devastation and probably some form of domestic ethnic conflict.

Those who cannot learn from history are doomed to repeat it. And those who cannot see emerging trends underway right now that show this history already repeating, are in charge of most Western governments. The Chinese don't call them Baizuo for nothing.

2017-12-05

人人币 China's Population Cryptocurrency

Some coin called 人人币 kept popping up in Weibo, along with Bitcion and Ethereum. Someone created a cryptocurrency that is based on China's population. The number of coins will increase and decrease with the population.

At the end of each month, Renminbi officials will destroy the previous year's death toll / 12-month Renminbi by means of wallet mutual transfers, and when major disasters and disasters occur in China, the development team will destroy the same number of victims in real time And record the time and reason for the disaster.
A list of some examples is on the website.

Caijing: 人人币:中国人的加密数字货币
Ren Ren Ren, English RenrenCoin, referred to as RRC, was born in May 1, 2014, and in June 1, 2015 by the quark algorithm for the second generation pos currency. The total amount of new pos coins is the current total population of 1.36782 trillion in China. The annual interest rate of POS interest is 1.236% (the average birth rate in China in the recent 10 years).

Renminbi is an encrypted digital currency that simulates the ecological conditions of China's population and is based on the actual population data of China. It is also the first digital currency in the world to integrate population ecological data into an encryption algorithm and give it a humanistic notion. Through the use of currency, users can get a general understanding of China's population, birth rate and mortality rate, remind people to cherish their life, care for those around them, and raise awareness of all kinds of unexpected disasters and disasters in China so as to encourage everyone to Chinese compatriots in need of assistance should be provided with assistance in the spirit and material resources. Each currency obtained through the interest of pos represents the birth of a new life in China, and every single currency destroyed represents a life in China that has passed away.

According to reports, Renminbi in the early design will be able to contribute to the community charity into one. In the event of a catastrophic catastrophe in China, when Chinese citizens die, Renminbi will destroy the currency in real time and record all destruction records by destroying the log. Therefore, at the same time of recording, the Renminbi can be applied to the charity system of Chinese society through the transparency and impartiality of the blockchain, so that those who need help can get real and effective assistance.
This makes sense as a way of controlling money supply, but not destruction of individual coins.

Imagine a currency worked this way: every person had 1000 coins gifted at birth and those coins are numbered 1-1000 based on their government ID number. Upon their death all the coins are destroyed. Immediately there would be a market opportunity in identifying people with low-risk lifestyles because their coins would likely last much longer. And the coins of people likely to die at a young age would immediately devalue. There would be an incentive to improve your lifestyle/conditions because the value of your own money would rise, assuming you held on to it. That's not how 人人币 operates, but I believe China will eventually cook up a digital currency that could include many such "enhancements."

2017-12-04

Enough Restrictions? Hot Cities Housing Markets "Frozen"

China's housing market could be in the doldrums for 5 to 10 years...and that's the optimistic scenario if prices hold up or continue rising.
iFeng: 热门城市成交急冻 未来5-10年楼市临两大利空
As for the real ultimate move, long-acting mechanism of combination therapy have 5-10 years. Why is this so long? The reason is also involved in all parties. How to balance is really troublesome. What is even more crucial is whether the long-term mechanism will continue to maintain a consistent upward trend after its entry into force. This is the key issue. Otherwise, the long-term mechanism will fail and make no sense.

Around the local revenue, the long-term mechanism will carry out detailed argumentation in terms of taxation, land transfer, finance and market players. Therefore, Gu Changyun optimistic estimate is 5-10 years.
Is this time finally for real? We'll find out in about 12 to 18 months.