China’s Economic Policy Factory: The NDRC; With vast powers over the economy, the NDRC is drawing the scrutiny and anger of academics and ordinary Chinese

China’s Economic Policy Factory: The NDRC

By Dexter Roberts on June 20, 2013

http://www.businessweek.com/articles/2013-06-20/chinas-economic-policy-factory-the-ndrc

Who decides the size of Shanghai Disneyland (116 hectares, now under construction), how thin plastic bags should be (no less than 0.025 millimeters), sets gasoline prices and taxi fares, and recently used its sweeping power to fine China’s two best-known liquor companies 449 million yuan ($73.25 million)? It’s the National Development and Reform Commission, the biggest, most powerful Chinese bureaucracy, with responsibility over broad swathes of China’s $8.5 trillion economy, and day-to-day authority that sometimes rivals that of Premier Li Keqiang’s State Council, its putative boss. Read more of this post

China’s credit growth to back lavish construction and infrastructure projects is similar to that of the U.S. and Japan before they faced financial calamities

SATURDAY, JUNE 22, 2013

Where Will It End?

By JONATHAN R. LAING | MORE ARTICLES BY AUTHOR

China’s credit growth to back lavish construction and infrastructure projects is similar to that of the U.S. and Japan before they faced financial calamities.

Of all the global economic powers, China would seem the most immune to the threat of a financial crisis.

It sailed through the post-2008 global credit implosion largely unscathed, by pumping up housing construction and infrastructure spending to compensate for slackening exports. First-quarter 2013 growth in gross domestic product, although the weakest in more than two years, rose at a rate the rest of the world would envy, 7.7%. Bad debts inside the Chinese banking system stand at a negligible 1%, compared with 3.4% in the U.S. and double-digit figures in much of the euro zone. Read more of this post

Korean banks, builders suffer from soaring lawsuits; Samsung Group’s financial affiliates ― Samsung Life, Samsung Card and Samsung Fire & Marine ― are involved in over 2,000 lawsuits, more than any other financial institutes

2013-06-20 18:56

Banks, builders suffer from soaring lawsuits

By Kim Tae-jong
Eighty percent of big firms surveyed are involved in legal disputes, recent data showed Tuesday.
According to the data compiled by business monitoring firm CEO Score, 182 firms that are under a “disclosure’ requirement by stock-related regulations are mired in 26,640 lawsuits. Read more of this post

In Brazil, Road Bandits Force Switch to Sea Shipping; Trucks transport 60 percent of Brazil’s cargo, about $470 million of which was stolen last year on the country’s roads

In Brazil, Road Bandits Force Switch to Sea Shipping

By Juan Pablo Spinetto and Christiana Sciaudone on June 20, 2013

Most companies decide how to ship their goods by determining the fastest route between point A and point B. ButParanapanema (PMAM3), Brazil’s biggest refined copper producer, is switching its domestic shipments to slow-moving ocean freighters from swifter trucks. Although the shift almost triples transport times, it cuts costs by 21 percent by eliminating a threat peculiar to Brazilian roads: thieves. Read more of this post

Turkey’s Liquor Market at Risk; The latest ad for Turkey’s Efes beer features an unmarked brown bottle and this cryptic message: “Even if we don’t see each other, we’ll know.”

Turkey’s Liquor Market at Risk

By Kristen Schweizer and Selcan Hacaoglu on June 20, 2013

The latest ad for Turkey’s Efes beer features an unmarked brown bottle and this cryptic message: “Even if we don’t see each other, we’ll know.” The slogan refers to a new law that not only bans alcohol ads but would also stop TV viewers from watching Homer Simpson enjoy a Duff beer in Moe’s Tavern, as depictions of drinking on television programs are to be blurred out. Read more of this post

Unable to Reach Deal, Europe Plans New Talks on Bank Rescues

June 21, 2013

Unable to Reach Deal, Europe Plans New Talks on Bank Rescues

By JAMES KANTER

LUXEMBOURG — European Union finance ministers haggled early into Saturday morning over rules to lessen the chances that taxpayers will bear the burden if banks collapse, but they failed to reach a deal.

“We ran out of time,” Michael Noonan, the Irish finance minister, told reporters as he left the meeting here. “There are still core issues outstanding, so we’ll need a full meeting next week, and there’s no guarantee it will reach conclusion.” Read more of this post

China’s WMP whack, revisited; Wealth management products will borrow money from the banks at quarter-end to repay investors just prior to the quarter-end.

The WMP whack, revisited

Joseph Cotterill | Jun 19 17:56 | 18 comments | Share

It’s getting (a bit) clearer of late that China’s interbank crunch is deliberate policy. Still, although of course “We cannot use as fast money supply growth as in the past, or even faster, to promote economic growth” sounds very serious, it’s a bit woolly. Why so keen to withhold official liquidity from Chinese banks, and continue withholding it, right now? Read more of this post

An unwind in the great Chinese over-invoicing carry-trade?

An unwind in the great Chinese over-invoicing carry-trade?

Izabella Kaminska

| Jun 20 16:16 | 8 comments | Share

The popular explanation for the rise in Chinese repo rates is being linked to the government’s desire to rein in the shadow banking sector. That is to say the tightness is intentional. But what if it isn’t. What if it has more to do with the unwind of yet another carry trade? Deutsche Bank’s Bilal Hafeez made a strong case for this interpretation last week. We think it’s worth revisiting the argument. There are three main factors that need to be considered, he argued:

Adjusted for volatility China now offers the highest FX carry in the world. This, he says, has led to a surge in flows into the CNY (and CNH) by both onshore and offshore entities over the last few years. The performance of the carry was reaching breaking point last week. Any combination of higher US yields, regulatory clampdown or higher FX volatility or CNY appreciation could trigger an unwind. And as he warned, the demise of the carry trade would then remove an important channel of cheap funding for the Chinese economy. Read more of this post

Even Starbucks gets the China real estate blues; “If even Starbucks cannot afford it, how on earth could normal people pay for property in China?”

Even Starbucks gets the China real estate blues

Jun 21, 2013 5:46pm by beyondbrics

By Gu Yu and Kathrin Hille

China’s soaring property prices have been a problem for a long time. But this week, it was not the country’s nascent middle class complaining about rising rents. It was Starbucks. On Friday afternoon, the US coffee chain closed the coffee shop that had been its first in China. And if its staff is to be trusted, the reason was skyrocketing rent prices.

Read more of this post

Who’s Manipulating Derivative Indexes and Why; How to think about the Libor scandal and its astonishingly proliferating offspring

June 21, 2013, 6:31 p.m. ET

Who’s Manipulating Derivative Indexes and Why

How to think about the Libor scandal and its astonishingly proliferating offspring.

By HOLMAN W. JENKINS, JR.

Is Ewan McGregor, who played Nick Leeson in the movie about the Barings bank bust, available for a sequel? He would find an oddly similar character in Tom Hayes, the former UBS UBSN.VX -1.93% and Citibank employee charged in this week’s latest financial scandal of the century. Read more of this post

Unwinding the world’s biggest economic experiment; When the Fed does change direction, tightening often comes in a rapid series of interest rate rises

June 21, 2013 5:51 pm

Unwinding the world’s biggest economic experiment

By Gavyn Davies

When the Fed does change direction, tightening often comes in a rapid series of interest rate rises

On Wednesday, the chairman of the Federal Reserve announced that the greatest experiment in the history of central banking might be nearing its end. Ben Bernanke’s announcement included many caveats, but the financial markets did not miss the message. Since 2009, the central bank has been buying financial assets – US Treasury bonds and some types of corporate debt – paid for by an expansion of the monetary base (so-called “printing money”). This kept interest rates low, which damaged savers but helped indebted businesses and households. It has also been the major prop for financial markets. Within about a year, if the Fed’s plans come to fruition, the US government deficit will need to be financed from private sector savings – not by the central bank. Asset markets will be left to fend for themselves as the biggest buyer withdraws from the arena. Read more of this post

The world is still being held hostage by its rotten banks

June 21, 2013 7:29 pm

The world is still being held hostage by its rotten banks

By John Plender

Another financial crisis is probable and it would be much more damaging to the global economy

In the midst of this turbulent summer in the markets, the revolving door at the top of British banking has been spinning unexpectedly fast. At the Bank of England,Sir Mervyn King, the governor, is shortly to be replaced by the governor of the Canadian central bank, Mark Carney. The abrupt recent announcement of the impending departure of deputy governor Paul Tucker preceded the appointment ofCharlotte Hogg, head of retail banking at Santander, as the Bank’s first chief operating officer. In the private sector, Stephen Hester recently found himself brutally ejected from his role as chief executive of Royal Bank of Scotland. Many in the City of London were disconcerted by the timing of the Tucker announcement and the Hester defenestration. Read more of this post