Soros Warns of 2008-Like Debt Growth in China. How Risky are Its Banks?

The lead story at Bloomberg is George Soros’ dire warnings about China a speech yesterday. He is talking his book; he’s short the renminbi, and pumped for China to float the Chinese currency against a broader basket of currencies, which would also lead it to decline against the dollar.

Soros made a doomsday call against Europe in 2012 that did not pan out, and he has been aggressive there in trying to influence policy, both on economics and on Ukraine. And he acknowledged that the timing of ugly end games is uncertain. Key sections from the Bloomberg story:

China’s March credit-growth figures should be viewed as a warning sign, Soros said at an Asia Society event in New York on Wednesday. The broadest measure of new credit in the world’s second-biggest economy was 2.34 trillion yuan ($362 billion) last month, far exceeding the median forecast of 1.4 trillion yuan in a Bloomberg survey and signaling the government is prioritizing growth over reining in debt.

What’s happening in China “eerily resembles what happened during the financial crisis in the U.S. in 2007-08, which was similarly fueled by credit growth,” Soros said…

Capital outflows from China are a growing phenomenon driven by the nation’s anti-corruption campaign, which makes people nervous and spurs them to pull money out, Soros said. While China’s reserves swelled by $10.3 billion in March to $3.21 trillion, they’re down by $517 billion from a year earlier.

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Pimco Economist Has A Stunning Proposal To Save The Economy: The Fed Should Buy Gold

Back in December 2014, just before the ECB officially launched its initial phase of QE in which it would monetize government bonds, Mario Draghi was asked a very direct question: what types of assets could the ECB buy as part of its quantitative easing program. He responded, “we discussed all assets but gold.”

The reason for his tongue in cheek response was because over the prior few weeks speculation had arisen that gold could be part of the central bank’s asset purchases after Yves Mersch, a member of the ECB executive board and former Governor of the Central Bank of Luxembourg, said on November 17 that “theoretically the ECB could purchase other assets such as gold, shares, ETFs to fulfill its promise of adopting further unconventional measures to counter a longer period of low inflation.”

Mario Draghi promptly shot down that idea.

But according to a provocative paper released by none other than Pimco’s strategist Harley Bassman, Yves Mersch’s inadvertent peek into what central bankers are thinking, may have been on to something. 

In “Rumpelstiltskin at the Fed”, Bassman goes down the well-trodden path of proposing Fed asset purchases as the last ditch panacea for the US economy, however instead of buying bonds, or stocks, or crude oil, Bassman has a truly original idea: “the Fed should unleash a massive Fed gold purchase program that could echo a Depression-era effort that effectively boosted the U.S. economy.”

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In 1 Out Of Every 5 American Families, Nobody Has A Job

If nobody is working in one out of every five U.S. families, then how in the world can the unemployment rate be close to 5 percent as the Obama administration keeps insisting? The truth, of course, is that the U.S. economy is in far worse condition than we are being told. Last week, I discussed the fact that the Federal Reserve has found that 47 percent of all Americans would not be able to come up with $400 for an unexpected visit to the emergency room without borrowing it or selling something. But Barack Obama and his minions never bring up that number. Nor do they ever bring up the fact that 20 percent of all families in America are completely unemployed. The following comes directly from the Bureau of Labor Statistics

In 2015, the share of families with an employed member was 80.3 percent, up by 0.2 percentage point from 2014. The likelihood of having an employed family member rose in 2015 for Black families (from 76.4 percent to 77.7 percent) and for Hispanic families (from 85.9 percent to 86.4 percent). The likelihood for White and Asian families showed little or no change (80.1 percent and 88.6 percent, respectively).
For purposes of this study, families “are classified either as married-couple families or as families maintained by women or men without spouses present” and they include households without children as well as children under the age of 18.

Digging into the numbers, we find that there were a total of 81,410,000 families in America during the 2015 calendar year.

Of that total, 16,060,000 families did not have a single member employed.

So that means that in 19.7 percent of all families in the United States, nobody has a job.

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“The Men Behind The Curtain Are Being Revealed” – CEO Says Real-World Pricing To Return To Gold & Silver Markets

Astute observers of financial markets, especially in the precious metals sector, have long argued that small concentrations of major market players have been manipulating asset prices. Last week those suspicions were confirmed when Deutsche Bank, one of the world’s leading financial institutions, not only admitted to regulators that they have been involved in the racket, but that they were prepared to turn over records implicating many of their cohorts in a global scheme to suppress prices.

In his latest interview with SGT Report, straight-shooting Callinex Mines CEO Max Porterfield explains that now that the men behind the curtain are being revealed, asset prices in precious metals, base metals and other commodities will return to more natural pricing mechanisms based on core supply and demand fundamentals.

They are being revealed, most certainly… whether anybody actually takes a fall for it is a whole ‘nother discussion in its own right.. It’s good someone is being held accountable in some form or fashion and at least we understand what we’re dealing with.

… The real world pricing is being seen not only in the precious metals space, but it’s being played out in other base metals as well… Underlying all this manipulation is really the supply demand fundamentals for all these commodities…

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Economy In Decline: Apple Reports Massive Revenue Decline As iPhone Sales Plummet Dramatically

Corporate revenues in the United States have been falling for quite some time, but now some of the biggest companies in the entire nation are reporting extremely disappointing results.  On Tuesday, Apple shocked the financial world by reporting that revenue for the first quarter had fallen 7.4 billion dollars compared to the same quarter last year.  That is an astounding plunge, and it represents the very first year-over-year quarterly sales decline that Apple has experienced since 2003.  Analysts were anticipating some sort of drop, but nothing like this.  And of course last week we learned that Google and Microsoft also missed revenue and earnings projections for the first quarter of 2016.  The economic crisis that began during the second half of 2015 is really starting to take hold, and even our largest tech companies are now feeling the pain.

This wasn’t supposed to happen to Apple.  No matter what else has been going on with the U.S. economy, Apple has always been unshakeable.  Even during the last recession we never saw a year-over-year decline like this

Apple today announced financial results for the second fiscal quarter (first calendar quarter) of 2016. For the quarter, Apple posted revenue of $50.6 billion and net quarterly profit of $10.5 billion, or $1.90 per diluted share, compared to revenue of $58 billion and net quarterly profit of $13.6 billion, or $2.33 per diluted share, in the year-ago quarter. As expected, the year-over-year decline in quarterly revenue was the first for Apple since 2003.

I think that this announcement by Apple is waking a lot of people up.  The global economic slowdown is real, and we can see this in iPhone sales.  During the first quarter, Apple sold 16 percent fewer iPhones than it did during the same quarter in 2015.  This is the very first year-over-year quarterly sales decline for the iPhone ever.  Here are some of the specific sales figures from the Apple announcement…

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