2018-06-29

China Further Opens Autos and Finance

Global Times: New negative list reflects opening-up policy
Chinese authorities released a new negative list, which identifies sectors which prohibit or limit foreign investments, on Thursday, and the number of items subject to special administrative measures was cut from 63 to 48, according to the document posted on the National Development and Reform Commission (NDRC) website.

The list scrapped shareholder ratio requirements for banks and lowered ratio requirements for securities, insurance and futures companies. The list also eliminated restrictions on the shareholder ratio for new-energy vehicles, and provided a road map for the further opening-up of the auto industry.

"For example, the new list will remove the shareholder ratio for foreign passenger vehicle manufacturers by 2022, which shows that the country will open its door wider to foreign investors not only for now but also in the future," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times.

China Launches 30 City Crackdown on Housing Speculators and Illegal Developers

Chinese regulators are targeting buying groups along with illegal developers and those still violating advertising rules.

Xinhua: 七部门将在30城打击炒房团 楼市调控再释强烈信号
The real estate market will be regulated again and again, and real estate speculators and “black intermediaries” in 30 cities across the country will be hard hit. According to an analysis, these 30 cities are the “nose of the nose” of real estate regulation. These cities are stable and the national real estate market is also stable.

  On June 28th, the Ministry of Housing and Construction and other seven departments jointly issued a notice that from the beginning of July to the end of December 2018, special actions to control chaos in the real estate market will be carried out in 30 cities including Beijing and Shanghai.

  There are four key targets: speculative real estate gangs, real estate “black media”, illegal and illegal real estate development companies, and false real estate ads.
For example, speculative real-estate gangs manipulate house rents, sell plates and reluctant sellers, fabricate false information, fabricate room illusions, drive up house prices, and provide “down payment” loans; “black media” crack down on violence and drive out tenants, bundle fees, and yin and yang contracts. , Compulsory provision of agency services, infringement of customer funds, participation in speculation real estate and so on.

  The 30 cities on the list include: Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin, Nanjing, Suzhou, Wuxi, Hangzhou, Hefei, Fuzhou, Xiamen, Jinan, Zhengzhou, Wuhan, Chengdu, Changsha, Chongqing, Xian, Kunming and Foshan. Xuzhou, Taiyuan, Haikou, Ningbo, Yichang, Harbin, Changchun, Lanzhou, Guiyang.
Zhang Dawei pointed out that from the perspective of the real estate market trend, the national real estate market in May has been warming up in the early days, and some cities have become irrational. It is expected that the temperature will cool down after the rectification.

2018-06-28

Another Chinese MLM Operator Goes Bust, Told Investors He Donated 9,000 Trillion to Govt

Yishangtong (易商通) is a firm that describes itself as an E-commerce giant:
E-Commerce is a group company with both traditional physical industries and internet platforms. The innovation drive is the source of the development of E-Commerce, actively embraces the Internet, reorients the development direction of the company with the Internet, and uses Internet tools to complete the industrial upgrading of the company. It is an enterprise group that proposes and practices the concept of integrating online and offline businesses. . E-Commerce Group has a strong sense of mission at the beginning of its involvement in the Internet industry. It is necessary to use practical actions to lead the Chinese real economy + the Internet, change the trend of the Internet giants to subvert the real economy, and clearly put forward the idea of ​​creating a civil ...
Critics say it is an multi-level marketing scam and possibly a Ponzi scheme.

iFeng: 易通商爆雷!董事长曾自称向国家捐款9000万亿
In an interview with Fenghuang.com, senior Xu Xu, a senior anti-MLM microblogger, stated that the e-Commerce business model is in line with the basic characteristics of MLM, namely, the absorption of investment, rebates, development of the offline, and the existence of suspected MLM or illegal fund-raising. The anti-trafficking coalition of non-governmental organizations also told Fenghuang Finance that the E-Commerce model is similar to the police's consumer rebates platform suspected of illegal pyramid schemes.

It is worth mentioning that some investors have reported that Gao Zhihua has sung a deposit bill with a China Construction Bank amounting to 9 trillion yuan in a circle of friends. According to a video obtained by Fenghuangwang Finance, the chairman of the company, Gao Zhihua, said: “I also prepared a huge sum of money for the next step of the Yishang Investment. How much money have I donated to the country? 9,000 trillion. The country has given me The reward is 20%. So really, I'm the richest person in the world."

Recently, Fenghuangwangjing visited the company headquarters of Yishangtong in Beijing Daxing District Zhongdian Jinyang Science and Technology Park and found that the company is still in normal operation.
The company stopped returning investor money in April:
Stop cashback in April

From April 14 this year, Yishang suddenly stopped cashing back investors who had already joined the meeting.

According to an e-Commerce red paper obtained by Fenghuangwang Finance, the company has already started the Tianyi Mall project to increase capital and expand shares, with an initial equity capital of RMB 20 billion. "Considering the consistency of operations, as of April 14th, the new consumption format will be suspended every week. If you do not choose to replace the original shares of Tianyi Mall, all consignment income will return to you within three months."
The company said it had a lot of work to transfer the 20 billion yuan:
A screenshot of the WeChat group provided by investors shows that Yi Shangtong’s chairman had been so reassured by investors: “This strategic transformation needs to cash more than RMB 200 billion, and lawyers and I conducted in-depth discussions. According to rules and regulations, such large funds will be transferred from public accounts to private accounts. How to handle tax revenues and how to deal with the bank's regulatory issues? These all require wisdom. I have a lot of work."

A screenshot sent to her by a friend known to Yi Shangtong in the Xuzhou area shows that the company promised to return the full amount before July 30 for investors who joined before April 14.

However, a number of investors have reported that the time frame for all cash rebates since April has been delayed. Therefore, Chen Xue is still very worried. “This is a month left to see if they will return.”
The company tried to get investors to convert assets into shares to avoid a payout. Those who demanded payment were told they can never invest with the company again:
E-Commerce also stated in the red-headed document that investors can convert the remaining balance remaining in the account into the original shares of Tianyi Mall in a 1:1 ratio. The two Yishantong investors that Fenghuangwang Finance met at the door of the company’s headquarters all said that they have already subscribed for a portion of the original shares. For this practice, Li Ji believes that the purpose of the company is to prevent the outflow of funds and prevent the July 30 premise of the excess investors, resulting in the fracture of the capital chain, so use the original stock way to continue the investors' money on the platform on.

For special circumstances, Yishangtong also stated in the red-headed document that “after verification, it can be returned in one-time, but this member will be blacklisted and will never be allowed to enter Yishangtong’s related projects”. Chen Xue told Phoenix Net Finance that her other relative had been in urgent need of money to buy a house. She applied to Yi Shangtong to apply for cash back in advance and was told that he would not be allowed to invest in Yi Shangtong again.
The company repeatedly turned to Weibo to calm investors:
uring this period of time, the company continued to publish information in the WeChat group of investors, stabilizing people's hearts. “It's the brainwashing stuff,” Chen Xue said. In Baidu Post Bar's “Easy Trading”, someone called everyone to “wake up and get up”. Some people are worried about asking “Why are the media are exposing E-Commerce”? Some people believe that E-Commerce Express will immediately honor Promised."
Those who raised questions about the company were targeted:
Among them, those who question Yizongtong in the Post Bar and WeChat group will be called "negative energy," and they need to be targeted. In a WeChat group called "Class 1 of Yijuntong Group Buying Service", someone posted a "negative energy" contact, saying "Can't let him break the reputation of our company." Others disclosed the contact information of a reporter who had reported Yi Shangtong, saying that "I had just learned to use the telephone to learn a lesson," and called on other people to "call and criticize this person".
The most absurd claim is the CEO saying he donated 9,000 trillion yuan (US$ 1.4 quadrillion) to the government.
Chairman's donation of 9,000 trillion to the country

The reason why Chen Xue joined E-Commerce is because her aunt has joined the club since 2016, and she is “convinced” to E-Commerce. She has long recommended to her and her husband, and often sends Chen Xue the daily necessities bought in the E-shop. Chen Xue said, “I don’t have any income at home and my husband’s income is very low. My aunt also wants to help us. I think this can make money. I believe in it over time.”

Some investors said that E-Commerce has used a variety of propaganda and even "brainwashing" methods to strengthen the trust of its members. Several investors told PhoenixNet Finance that I, or my family members and friends, had participated in the e-Commerce organization training. In addition to a business school that specializes in training at its headquarters in Beijing, E-Commerce also regularly holds lectures and other activities in other parts of the country.

You can see the CEO Gao Zhihua speaking to one of these groups on the company website. He also has a fake deposit slip he shows to investors to prove he donated the 9,000 trillion yuan.
In addition, Yi Zhitong, Chairman of the Board of Directors, Gao Zhihua also has excessive self-promotion. In the article on the June 25th anti-passing alliance, a copy of China Construction Bank’s deposit slip that Gao Zhihua had sung in a circle of friends was exposed. The deposit slip shows that “On January 28, 2018, we hereby certify that Gao Zhihua has savings deposits or voucher bonds (capital) in our bank: RMB 玖仟 柒 柒 柒 柒 捌 捌 叁仟 叁仟 叁仟 叁仟 叁仟"Luo Lu picked up Lu Wanwu and picked up the yuan." (ie 9077708833665421.12 yuan) The bottom right corner of the deposit slip is covered by the official seal of the China Construction Bank Co., Ltd. Beijing Qianmen Branch.

He claimed the 9,000 trillion came from overseas Chinese and the government gave him a 20 percent fee for bringing the money back:
According to a video obtained by Phoenix.com, one person who is in line with the president of the company’s official website, Gao Zhihua, said: “The Internet is a capital outflow. I’m moving the Chinese nation’s patriotic overseas Chinese’s money to China. Then I’m the first to move back. Is 9,000 trillion."

“I also prepared a huge sum of money to invest in Yi Shangtong's next-generation Tianyi. How much money I donated to the country, 9,000 trillion. The reward that the country has given me is 20%. So it’s real, I’m It is the richest person in the world. " The person said.
...For the video and certificate of deposit, Fenghuangwang Finance seeks evidence from Yishangtong as an investor. The company’s customer service staff said: “I haven’t said this 9,000 trillion, but it is not the range that we consider. If there are problems, they can go The department reported that there is no problem. They do not need to create this momentum."

The China Construction Bank official website released on April 26, the first quarter of 2018 results show that as of March 31, 2018, China Construction Bank's total assets of 22,848,740,000,000 yuan, an increase of 724.357 billion yuan over the previous year, an increase of 3.27%. According to an article from the Anti-Tribune Alliance, “China Construction Bank’s total assets in the first quarter of 2018 were only about 22 trillion yuan, and Gao Zhihua himself had 9,000 trillion in deposits at the bank on January 28. Such a wicked trick is ridiculous.
If you notice the links above to the company website, it uses a bunch of numbers. Many Chinese websites use the first pinyin letter of their name as well as numbers, but it looks like this company must have many websites with strange addresses:
Phoenix Internet Finance finds the official website of e-commerce (www.sht315.com) via Baidu search. After clicking on the page, it is redirected to the e-shop.com page and cannot log in to the official website. Fenghuangwang Financial calls the E-shop customer service phone to find out the reasons. The staff provides another website for direct login to the official website (www.2012-12315.com).

Fenghuangwang Finance Inquiries on this website found that the domain name has been evaluated by the Shanghai Public Security Bureau's counterfeit website identification service website as “the website is not credible and is not recommended for access”. In addition, some netizens have asked if the website is reliable at the online trading protection center. The online trading protection center replied that “internet investment and wealth management are at risk. We have received many similar complaints, and the police have issued police and civilian tips, suggesting not to believe in lucrative returns. Said."

Lawyers and consumer advocates say MLM operators are disguising their scams as e-commerce:
Zhao Occupy of the China Internet Association Credit Rating Center’s legal advisor Zhao Zeng once stated in an interview that the full amount of rebates is equivalent to consumers buying goods at high prices, and merchants borrowing money from consumers using goods, and the goods themselves are equivalent to interest. The use of MLM methods to allow consumers to pull their heads and develop downline rebates is "the greatest harm, but also need to focus on the fight," "There are some companies known as a new type of e-commerce model, in fact, is a variant of MLM."

Wuzheng Law Firm lawyer Wu Zhenglong explained to PhoenixNet.com, if you want to make a legal statute on Easycom, you may be involved in two charges. According to the Supreme People’s Procurement and Supervision Ministry’s Regulations on the Prosecution of Economic Crime Cases, the unit illegally absorbs or disguisedly absorbs public deposits, amounting to more than one million yuan and involving more than one hundred and fifty people, creating a direct economy for depositors. Losses equal to or more than RMB 500,000 may constitute the crime of illegally assuring public deposits; the number of organizations and leaders participating in MLM activities exceeds 30, and levels above the third level may constitute the crime of organizing and leading MLM activities. Wu Zhenglong said that in actual operations, many cases of illegal fund-raising will also include the characteristics of member levels and pull people's pyramid schemes.
The reporters from Phoenix Online found the copmany selling goods at a 500 percent markup.
Phoenix Cyber ​​Finance found at the headquarters supermarket that the price of the product of Easy Book Mall is generally much higher than that of the same type of products on the market. For example, a Kudzu powder product sold in the easy store, 400 grams of a box of the price is 258 yuan, while the same weight of Pueraria powder products on Taobao, the price is almost below 50 yuan.
Investors who lost hundreds of thousands of yuan in other scams thing Yishangtong is "too big to fail."
Fenghuangwang Finance asked the investors who went forward to pick up the goods from the headquarters in the name of joining the meeting. The other party said that “E-Commerce is really good”. Previously, he had already lost hundreds of thousands of dollars from Cloud Trade, another rebate platform, but the investor told Fenghuang Finance that “E-Commerce is so large that it will not collapse”. Cloud Trade has been identified as a typical MLM by the Ministry of Public Security in September 2013.

...Wu Zhenglong said of members with this kind of mentality, "All investors feel that they will not be the last one when the music stops."

Xinhua.net published an article quoting Yishangtong CEO Gao Zhihua back in January.

Xinhua: 易商通:搭建共享平台 引领分享经济
Recently, Gao Zhihua, chairman of the E-Commerce Global Holdings Group, said in an interview with reporters that in the current era of Internet of Everything, the Internet should evolve into a fool tool, and any individual and company can easily manage this tool for themselves. Our company has a 10-year plan, a shared platform for the first five years, and a shared economy for the next five years.

  Gao Zhihua said that in the new round of scientific and technological revolutions and industrial changes in the world, the integration and development of the Internet and various fields has broad prospects and unlimited potential, and it has become an irresistible trend of the times. The Internet tool should serve all humanity. Everyone should share the dividends that Internet technology has brought to humanity. However, the current situation is that the combination of a few people who understand Internet technology and offshore capital has subverted the traditional business opportunities and caused many operators in traditional industries to lose their original business opportunities, and they do not know how to capture new business opportunities after the Internet forces everyone to make a transition. So everyone feels business is bad. In short, a few people have enjoyed the dividends of the Internet development. Most people are too anxious to do anything.
In April, 直销网 or "direct marketing website" warned about the company.

直销网: 为什么我们要对易商通发出风险预警
Why do we need to include Yi Shangtong on the list?

  Anti-MLM Network, Anti-Transmission Alliance, and Anti-Movement Manager are currently self-media platforms owned by Fuzhou Juyou Network Media Co., Ltd. and were founded by a private anti-mutual marketing agent, Ling Yun. They have been advocating the prevention and marketing of MLM in the past 12 years, through phone calls and the Internet. Users from all parts of the country are invited to consult and answer related questions such as pyramid schemes and illegal fundraising, and through the collection of information on various platforms, early warning information is issued to financial scams that are suspected of pyramid schemes or illegal fundraising. These tasks have always been our work responsibilities and social responsibilities. The large amount of work we do has been highly recognized and supported by functional departments at all levels and social media. At the same time, we have also benefited many families, making them understand the MLM and scams and prevent them from being scammed. Defrauded.

  E-Commerce has been listed on the early warning list with full factual basis, and it is also a summary of the work that we received from a large number of consultations, reports, and complaints. The following figure (part of the complaint information display):
They used high rebates/returns to pull in investment:
E-Commerce's model shows that six ministries and commissions jointly warned the "consumer rebates" risk
  E-Commerce, under the guise of “military innovation,” uses the so-called “consumer new format + localized consumption + Pratt & Whitney e-commerce consumer pension program that is about to detonate the market” as the slogan, under the guise of “consumer capital theory,” declared Investment 5000 can earn 8,000, and there is a general situation where one person invests hundreds of thousands of dollars. There is a very high financial risk, suspected of pyramid schemes and illegal fundraising.

....After investigating the business model of Yishangtong Monopoly Mall, there was a behavior of consumer rebates. Online and offline malls were used to absorb members for high rebates. The company promised to invest RMB 5,000 in members and return RMB 8,000 in 10 months, and it was suspected of illegally raising funds.
Admissions Rewards Program
Entrusted by the training center of the Ministry of Commerce of the People's Republic of China, China E-Commerce (Group) Co., Ltd. has established an e-commerce training course aimed at cultivating (reserving) more e-commerce talents for China and creating more middle classes. Divide the worries for the government, do a good job of laid-off and re-employment, college students choose jobs, resettlement of military personnel, urban and rural Internet docking four major projects.
  After the training of the training center of the Ministry of Commerce, through the qualification test for the 'E-Commerce Division', a certificate of completion is issued by the Ministry of Commerce and the certificate is accepted.
  E-commerce training fees:
  The primary class training fee is 10,000 yuan (free use of cloud shopping website)
  Intermediate class training fee 20,000 yuan (grant cloud shopping site operating right)
  Advanced class training fee 40,000 yuan (Gift cloud shopping site operating rights and logistics service center)

  Admissions Reward Scheme (Bonus System):
  First, the direct enrollment award: 10% of the enrollment amount;
  2. Proportional Award (Balanced Prize): Two markets form Belgium, taking 10% of the district's performance;
  3. Management Award: Take 100% of the direct recommender's proportion award;
  Fourth, the top 180 shareholders (when your team's total performance reaches 1 million), have a 1% weighted bonus on total performance.
  V. Withdrawal mechanism: On the premise that there is no income within six months, the seventh month will be refunded at 10% of the cost of your enrollment training until the 1.5-time contract is terminated:
  6. 5% of the overall income as personal income tax is deducted directly by the company; 5% of the overall income is used as a mutual aid award (as a reserve of 1.5 times the return principal); 5% of the total income is issued as a cumulative monthly basis.
  In order to better unify ideas, unify goals, unify wills, and unify actions, starting from mid-October 2012, China E-Commerce (Group) Co., Ltd. and China Welshwin (Beijing) Investment Fund Management Co., Ltd. will have plans and steps. A student recruitment conference was held at the training base of the Ministry of Commerce to recruit people with lofty ideals from across the country. Training, education, and promotion of recruiting students. Through training, a group of management talents, network professionals, enterprise consultant talents, and logistics management talents who meet the needs of e-commerce businesses will be created. At the same time, the company will also expand its diversified business development channels so that more people will use the “cloud shopping” website as their own business and give autonomy, hope and glory to everyone who loves life and strives hard.
  My colleagues, fellows, and friends expressed our applause for the e-commerce carrier E-Commerce China Merchants “Cloud Shopping” China’s first consumer portal, which is in line with national conditions, in line with people’s conditions, and advancing with the times. Germany and work hand in hand to fight for the better tomorrow of e-commerce in the Chinese nation!


  Making progress against MLM is difficult, there are many problems

  In recent years, the rapid development of online MLM has made it possible for various names to be covered, and tens of thousands of MLM companies use the registered company as a cover. And pyramid schemes and illegal fund-raising, anti-trafficking network as a folk anti-trafficking force, propaganda, education, popularization, exposure, early warning and other work pressure, face tens of millions of MLM staff, tens of thousands of MLM companies Our strength is extremely weak.
  In the past two years, in the face of our early warnings, MLM organizations have often launched millions of members to conduct public opinion attacks on the anti-MLM networks and anti-transmission alliances. In the name of "walking dogs, traitors, sabotage of ethnic enterprises, extortion, extortion, triads, and foreign forces..." various attacks and black texts are overwhelming on the Internet. Those ignorant MLM fanatics do not have basic judgment. Take the rumors.
  In addition to public opinion attacks, various lawyer letters and indictments have come. In the face of fraudulent companies with strong economic strength, they have a strong team of lawyers, and our weak powers are deeply inaccessible.
  In addition, there are all kinds of threats to the use of evil forces, tracking, MLM companies can actually get 400,000 to find the underworld, the purpose is to let us stop exposing the nature of their MLM fraud. Their case outcome proves that they are indeed a bunch of fraudsters and that hundreds of thousands of people have been defrauded for everything! And our weak power must be careful for the safety of the family!
  Cracking down on pyramid schemes and cracking down on illegal fund-raising is a difficult task. People's greed, people's ignorance, people's incomprehension, people's non-common sense, people's gambler psychology, people's riches and fantasies... Let the crooks have fertile soil for survival and growth. The government is deeply fatigued. We are even more exhausted. We have persisted for 12 years in the face of pressures and difficulties. We will continue to do this thing. We are always yelling: Far away from MLM and away from illegal fundraising requires the participation of the whole society!

China Removes Airline Ticket Price Controls, Prices Jump

21st Century: 民航票价市场化改革落地,北上广深互飞全线涨价
The new round of commercialization of civil aviation fare market reforms entered the stage of landing.

Recently, the 21st Century Business Herald reported the price of the domestic "four major aviation routes" (including shared flights) in July. The data shows that in the 306 marketized routes opened earlier this year, there are already more than 60 route prices. It has been raised, and the rate of increase has been more than 9.5%.

On January 5 this year, the National Development and Reform Commission and the Civil Aviation Administration jointly issued a notice and decided to expand the scope of the market-adjusted price route, adding 306 new routes to the original. Exceeding expectations, the route opened up this time was not only numerous but also of high quality. It covered major routes including the first-tier cities.
From June 25th to June 26th, China Southern Airlines (600029.SH), China Eastern Airlines (600115.SH) and Air China and other airlines have successively raised the price of full-price tickets for the economy class on the Beijing-Shanghai route from The original 1,240 yuan was raised to 1,360 yuan.

The Beijing-Shanghai route is hailed as the most profitable "golden route", with the number of flying flights and passenger traffic ranking first. According to CADAS, a civil aviation data analysis agency, between January and April 2018, there were nearly 10,000 flights on the Beijing-Shanghai route, with 2,322,200 passengers and an average passenger load factor of 89.95%.

Due to the majority of public business travelers on the route, the price sensitivity is relatively low, so the route is considered to be one of the routes with the most price increase space. In contrast, the Beijing-Hangzhou route began to implement market-based pricing in 2013. At present, full-price ticket for economy class has reached 2,200 yuan.

2018-06-27

Demographic Change Hits Democrat Party

ZeroHedge: Pelosi Pissed As Liberal Media Loves Socialist Millennial Who Beat Democratic Leader
"They made a choice in one district. So let’s not get yourself carried away as an expert on demographics and the rest of that. Within the caucus or outside the caucus, we are — again, we have an array of genders, generations, geography, and there is opinion in our caucus, and we’re proud of that. The fact that in a very progressive district in New York, it went more progressive than — Joe Crowley is a progressive, but more she’s left than Joe Crowley, is about that district."
The Democrat Party is moving left because immigrants are voting identity, removing older immigrant groups (Jewish, Irish, Italian) and they are more socialist than natives. This is why the Republican party has become "the white party." It's why the conservative movement is dead as centrist and even some left-leaning whites move out of the Democrat Party and into the Republican. It's why partisanship increases as the Democrat Party becomes more socialist and the Republican Party more white.

The ideological split in the country also falls heavily along color lines. Ideological differences are already blamed on racial differences, turning partisanship into racial animus. The country is moving left thanks to demographics only. This will create an extremely wide partisan division in the future. The way to overcome the division is ironically identity politics. If Democrats can become the pure anti-white party, but pull in enough far-left whites (about 20 percent of white voters) they will rule America. If Republicans can pick off one minority group, they will rule America.

A civil war runs the risk of becoming ethnic, racial, regional and religious warfare. America could become a powder keg if social mood sinks. Partition is also possible. If any state from either side moved to leave, it would flip the remaining USA into the hands of the other party. As with the Civil War in 1860, as soon as one move is made, it sets off a chain of dominoes that brings everyone into the war.

Destocking Is Over, But Local Govts Still Demolishing Housing

21st Century: 去库存告一段落 棚改货币化安置渐“退潮”
In recent days, rumors of the “change across the country, across the country, all suspended,” have aroused widespread concern. From the actual situation, 2018-2020 shed change target is 15 million sets, with an annual average of 5 million sets. Under this goal, the shed change project cannot be implemented across the board. Just in the context of declining real estate inventories and increasing pressure from local debt, relevant parties have made some adjustments to the shed change policy. In some places, the percentage of monetized resettlement has been changed in control sheds. In some places, the progress of shed reform projects has been slowed down, and banks have appropriately tightened loan approvals. Then, how will these changes affect the real estate market, macroeconomic operations, and monetary policy? This topic will be discussed.
Recently, the rumors of a "shed change, across the country, all suspended," are spreading. Affected by this rumor, real estate shares fell for two consecutive days.

Although the transformation of shantytowns is still proceeding drastically, there are various indications that the monetization of the past two years is gradually becoming “a retreat”.

In this year's government work report, there is no “monetary resettlement” for the expression of shanty towns. Local governments have long been aware of the changing direction of policy changes. Since the first half of the year, many local governments have clearly pointed out the trend of changes in the shed change policy from monetization to physical resettlement.

As an important part of affordable housing projects, it has taken several years to implement large-scale shantytowns in China. In recent years, the proportion of monetarization has continued to increase. The monetization of sheds is considered to be the main method of stock removal in third- and fourth-tier cities, but at the same time it has also been criticized as the promoter of rising house prices.
This is a broken windows policy. China has existing housing stock. It is demolishing it and paying the homeowners cash that can be used for the purchase of a new home. Undoubtedly some of that housing was low quality, and some of it likely was not. Or at least, if offered a low cash subsidy to simply stay in their current home, many people may have taken the cash. The government induced people to make a transaction they would otherwise not make. It is cash-for-clunkers on a grander scale. Also on a more permanent scale, since cash-for-clunkers accelerated car sales a few years, but shantytown renovation might have consumed 20 or more years of demand.
Some analysis pointed out that as the scale of inventories declines and the pressure on local debt increases, the monetarization and resettlement policies are being adjusted according to local conditions, and the gradual decline will be the general direction. However, this does not mean that the shed improvement process will slow down significantly. Considering the promotion of local economic growth, taxation, and urbanization, squatter settlements will gradually become more standardized.
The amount of cash going to home buyers soared into 2017.
Shack to monetize resettlement

In recent years, China's shed change has always maintained a larger scale. The target for 2015-2017 is 18 million sets, and it will be successfully completed. The target for 2018-2020 is 15 million sets.

As for the proportion of monetized resettlement, it was 9.0% in 2014, 29.9% in 2015, and rose to 48.5% in 2016. Although the official proportion has not yet been announced in 2017, from the perspective of local samples, I am afraid that it will only increase. The last year's monetization resettlement rate in Jiangsu Province was 52.83%. Many securities companies believe that the proportion of monetized resettlement in the country last year was about 60%.

As the large-scale shantytowns transformation will release a large number of housing purchases in the short term, monetization-based resettlement will increase their purchasing power. Therefore, the effect of destocking on commodity housing is very significant.
The government wasn't responsible for 60 percent of demand in 2017, but a huge chunk of housing demand in third- and fourth-tier cities came from this program. And now it's scaling back considerably as the central govt worries about local govt debt levels.

Developers were saved by the plan:
In a fourth-tier city in southern Shandong Province, local housing enterprises told the 21st Century Business Herald: “After the county started the shed change, the market suddenly emerged many buyers, and in the event that the regulation and control policies failed to follow-up, the result was "The new district has been sold out after years of selling old items, and some small developers nearing death have also been saved."

Because of this, the proportion of monetization in the third and fourth-tier cities is relatively high. In 2017, Jiangsu Province took a different approach to cities where the digestive cycle of commercial housing was within 15 months and beyond. The cities with long digesting cycles of commercial houses are more focused on monetization of sheds, and vice versa. Among them, the proportions of monetization resettlement for the three national hotspot cities in Nanjing, Suzhou, and Wuxi totaled 19.83%, compared with 62.24% in other cities.

Some organizations have estimated that in 2017 China's shed change plan will start 6 million sets. Even if the 50% resettlement ratio is neutral, it can achieve 255 million square meters of destocking.
If developers didn't make hay while the Sun was shining and reduce they're activities, they will be caught as the government tide goes out.
In the past year or two, the property market in the 3rd and 4th tiers has been extremely strong, and large-scale housing enterprises have generally achieved good sales performance in these regions. The mainstream view is that this is due to the severe control of hot and cold first- and second-tier cities, as well as the acceleration of the monetization of shanty-store reforms in third and fourth-tier cities. "The market has suddenly increased millions of home buyers who hold cash, and most urban credit policies are still relatively loose." Zhang Dawei, chief analyst of Centaline Property, said.

The monetization of sheds has also pushed up housing prices in third- and fourth-tier cities. A listed person in a Beijing housing company pointed out that the reasons for the rise in housing prices in the third and fourth tier cities are the rising demand for investment, loose credit policies, and the macro factors that brand housing companies are sinking into third and fourth tier cities. "But the large-scale monetization of shanty rehousing is still the primary driving force for the robust property prices in the third and fourth tiers," he said.
Prices are expected to fall as demand falls in third- and fourth-tier cities.
The three-and-four-tier property market will cool down

In fact, the policy signal has long since been released. In the government work report released during the “two sessions” this year, there was no “monetary resettlement”. In the government work report of the past two years, there was a clear reference to “promote the ratio of monetized resettlement”.

Local governments obviously also noticed this change. In April of this year, Anhui Province pointed out at the promotion meeting of the provincial township protection and housing project that all localities must reasonably control the proportion of sheds to monetization, and cities and counties with tight supply and demand of commodity housing should further reduce the proportion of monetized resettlement. In Huaibei City, it was emphasized at the summary meeting in mid-June that “the county and district governments must plan for the resettlement plots in advance in response to the change in the policy of shed change from monetized resettlement to physical resettlement in 2018...

Analysts believe that regardless of market rumors whether there is a basis, the monetary resettlement policy has gradually weakened, and in the future may further ebb.

However, the renovation of squatter settlements will not in itself greatly slow down. The 21st Century Business Herald interview found that as a political task, most of the city’s shed reform tasks have not been reduced, and the enthusiasm for advancing shed change is high.

In June this year, in Shangrao City, Jiangxi Province, at a press conference, Shangrao City promoted the decommissioning of commodity housing through the transformation of shanty towns. In that year (2017), the period of decontamination of commodity housing fell from 24 months at the beginning of the year to 7 months, which promoted The healthy development of the real estate market; driving the development of related industries such as construction and real estate transactions, increased taxation, freed a large amount of land, and optimized the spatial layout of the city.

Yin Yuejin, director of the Think Tank Center at Shanghai Yiju Research Institute, said that the transformation of shantytowns to the local economy cannot be neglected. In this sense, the enthusiasm of the local government for shed change has not been extinguished. Judging from the existing policy actions, the future shed change will be gradually standardized to minimize the impact on house prices and local debt.

He believes that with the retreat of the shed to monetization resettlement, the third and fourth line of the property market is likely to cool down, the number of three-and-four-tier cities continue to lead the price increase for many months will be less and less. In the future, housing companies will be more cautious when entering these areas. This may even force some of them to return to the first and second-tier cities.
Demolishing old homes to soak up existing housing stock is still a favorite of local governments. Instead of getting cash for a home purchase, home owners whose home is demolished will be given a new home. The broken windows policy will continue.

Chinext Analog

Although post-2015 Chinext is much higher than the post-2000 Nasdaq at the same point in time, the Nasdaq had already bottomed.

Buy The Dip? Civil War Polls High

Mood may be hitting a short-term bottom here as poll numbers show a spike in respondents who think a civil war is likely.

Rasmussen: 31% Think U.S. Civil War Likely Soon
Thirty-one percent (31%) of Likely U.S. Voters say it’s likely that the United States will experience a second civil war sometime in the next five years, with 11% who say it’s Very Likely. A new Rasmussen Reports national telephone and online survey finds that 59% consider a second civil war unlikely, but that includes only 29% who say it’s Not At All Likely.

...But 59% of all voters are concerned that those opposed to President Trump’s policies will resort to violence, with 33% who are Very Concerned. This compares to 53% and 28% respectively in the spring of Obama’s second year in office. Thirty-seven percent (37%) don’t share that concern, including 16% who are Not At All Concerned.
Maybe mood hasn't changed that much.

2018-06-26

Over 3 Days, 3 Cities Shutdown Commercial Purchases of Homes; A First in China

Perhaps partially related to the Chinese guy in Hangzhou who bought 5 houses through shell companies. Also related to the government's inability to fully curb speculative behavior. Maybe this will finally be the straw that breaks the camels back. Along with the end of PSL lending for shantytown renovation, China's working hard to restrict a major source of GDP growth.

Xinhua: 三天三城暂停企业买住房 更多城市或跟进
The property market has seen new trends in its regulation and control, and it is directed at companies buying homes.

  On June 24th, Xi’an announced that it would suspend the purchase of houses by enterprises and institutions in the restricted purchase area. This is the first case in the country. Following the footsteps of Xi'an, Changsha and Hangzhou quickly released similar policies on the 25th and 26th.

Three days and three cities, control pace is quite compact.

Xi'an requested that the sale of housing (including commodity housing and existing housing) to enterprises, institutions, and other institutions be suspended within the scope of the home purchase restriction.

  Changsha stipulates that the purchase qualification review of commodity housing (including newly-built commodity housing and second-hand housing) be further strengthened. Suspension of the purchase of commodity housing within the restricted purchase area by the enterprise, and the purchased commodity housing may be transferred only after it has obtained the certificate of immovable property for 5 years.

  Hangzhou proposed to suspend the sale of housing (including commodity housing and second-hand housing) to enterprises, institutions, and other institutions within the area of ​​housing purchase restrictions, and requested the municipal housing and housing management department to further study and improve relevant policies.

  Judging from the previous policy of restricting purchases by cities, most of them are targeted at individuals or families, and there are few restrictions on buying houses in the name of companies.
So, why should companies suspend their businesses for housing this time?

  Officials everywhere say this:

  "Prevent the speculation of real estate speculation in the name of a company." The person in charge of the Xi'an Housing Authority said.

  Wang Weisheng, director of the Changsha City Housing and Construction Commission, said that the main contradiction in the current regulation and control of the property market in Changsha is not the contradiction between supply and demand, but the contradiction between real estate speculation and real estate speculation. He stressed that we must “resolutely curb speculation and real estate to ensure rigid purchase demand.”

  The official WeChat public account of the Hangzhou Municipal Bureau of Housing and Housing Insurance issued a statement on the suspension of the purchase of housing by enterprises and public institutions. “The fact that the three companies had won the counterfeit number in the process of public sales of the Jiuchai’s Cangxiang project has caused a large number of Internet users. attention."

  Some netizens commented, "I don't even know that companies can buy homes."

  What exactly are some companies doing real estate speculation?

  "Real estate speculators borrow the 'company' shell to operate has long been an open secret, not limited to the impact of limited purchases and restrictions." 58 Bo Habitat Research Institute chief analyst Zhang Bo said in an interview with the China New Network reporter.

  Zhang Bo said that there are two main ways to speculate in the name of the company:

  One is to buy and sell real estate in the name of a company to make a difference. In most cases, this method will be adopted, but it will involve higher transaction taxes.

  The other way is to trade real estate by direct transfer of the company, usually in larger luxury homes, in a one-time transaction with multiple properties, or in such a way.

  “Especially in the city where the ban has been sold, the proportion of companies purchasing homes has continued to increase.” Zhang Dawei, chief analyst of Centaline Real Estate explained that the restrictions on the sale time of individual home buyers are limited by the increase in transaction taxes even when companies buy a home. However, during the restricted sales period, no transfer of ownership is allowed. It is entirely possible to use disguised forms of equity transactions in disguise to bypass regulatory policies and reduce some transaction taxes.
Industry analysts said that in the future it is expected that there will be more cities in the regulation to fill this loophole.

  At present, Changsha requires that “purchased commercial housing must be acquired after obtaining a certificate of immovable property for 5 years.” Hangzhou should further study and improve relevant policies.

Third and Fourth-Tier Cities Doomed As PSL Goes Away, Deleveraging Will Not End

"There is no support for property prices in third- and fourth-tier cities."

This is not an article I found through searching (as was the case with some of the recent default articles), but the top story in the finance section at iFeng. It's also a rather pessimistic article on the end of CDB lending for shantytown renovations (broken windows policy). Given Chinese control over the media, I wonder if this is a plea for more liquidity and government support, or if it is officials letting everyone know: this time, deleveraging is serious. Clearly, the author of this piece thinks this policy change is a way, way bigger deal than foreign media, which have barely covered it thus far.

Note: monetization in the Google translate refers to monetary resettlement. In some cases people were moved from a home to another existing home. In other cases they were given money to buy a home. The latter had a bigger impact on home prices and the housing market.

iFeng: 三四线楼市再无未来
The general path is this: The Central Bank gives the money to the National Development Bank and the Agricultural Development Bank through the PSL, and the local government transfers the money to the residents of the shanty-improved district, in return for land conversion. The shed change residents did not have a place to live, ran to buy commercial housing, the developer's inventory decreased, and then took the house selling money to shoot the land, the local government got the land transfer money also went out of the country to open the bank and the Agricultural Development Bank loan, forming a closed loop.

This cycle is like a super engine. Even if it is installed on a Wuling vehicle, it can easily bend over the GTR on the Tyumen Mountain. In the three or four-wire fixed assets, there is no depreciation due to the passage of time. Instead, youthful vitality and house prices have been rising. Those bricks in the empty city have changed from “Mrs. Cow” to “Sweeties.” "" The scene of the magical reality is once again staged. No one buys three or four thousand, and seventeen to ten thousand cannot buy it.
The economy is losing this super charger growth engine that has been boosting GDP.
In the past few years, the global economy as a whole was still in the fog of the economic crisis in 2008, and the low-cost advantage was also slowly disappearing. Foreign demand was actually far from satisfactory. As for investment, it is real estate investment. In the past few years, shed change is the core of real estate. In summary, the shed change is the thickest leg that supports the Chinese economy in the past three years.
The top left box is manufacturing --> exports then down to the economy. The bottom is the shantytown renovation --> investment and the over to the economy.
The monetization of the shed change is the thigh that supports the housing prices in the third and fourth tiers.

According to empirical data, 90% of the shed change is monetized in third and fourth tier cities, which is also the worst in excess inventory. According to the data of the Central Middle School, the 100 urban shed reforms in 2018 are mainly concentrated in inland areas, such as Shandong in the North China Region, the Shanghai-Nanjing-centered periphery in the East China Region and Anhui, and the Central and Western Regions in Henan, and the middle reaches of the Yangtze River in Hubei Province. , Jiangxi, Hunan, Chengdu-Chongqing urban agglomerations in Sichuan and Guizhou in the third or fourth line, and even five-tier cities.

Before 2015, the monetized resettlement housing sheds accounted for 2%-3% of residential sales in the current year. After 2015, the monetization ratio of shed jumps directly from less than 10% to 30%. Monetary resettlement houses accounted for residential sales in the current year. About 14%, the proportion of monetized resettlement increased to 48.5% in 2016, accounting for 18% of the residential sales in the year.

The year-on-year sales growth of commercial residential housing in 2017 was 5.27%, with a total of 1.448 billion square meters of new real estate residential sales. It is expected that the monetization rate of sheds will reach 60%. Calculated at 90 square meters per floor, the monetization of sheds will contribute approximately. 280 million square meters, which accounted for 22.6% of new residential sales in 17 years, more than one-fifth of the new houses sold last year were consumed by monetization.
A broken windows policy resulted in a debt build-up on local government balance sheets as government funds poured into the market to buy commercially developed properties.
According to related persons pointed out in the 21st Century Economic News interview, the shed change loan is generally a three-year period. Since 2017, many projects have required the government to repay the principal. According to the existing regulations, the local government's shed financing does not belong to the government's first, second and third classes of debt, it does not belong to the category of local debt, but belongs to other categories. It may be that the relevant departments, after investigation, regard the local government's shed reform project financing as implicit debt and need to control its total amount.

So what is the impact of this shed change?

Now that Americans are starting to sharpen their knife, the export situation is more severe than before. They can only hold the shed to change the thigh. In the next three years, 15 million units should be completed, but they cannot be over-monetized and resettled. Therefore, only physical resettlement or real estate investment will be formed. However, the resettlement process does not involve market transactions and will not result in the demand for commercial housing. The thighs of the monetized resettlement held by the third- and fourth-line prices are gradually becoming thinner. However, there is no support for property prices in the third and fourth tiers. Developers' incentives to use the land will weaken, and there will be pressure for the local government to transfer funds to repay the sheds and change debts. Therefore, this transitional phase will be the key.
Conclusion

In the past, the deleveraging was always come and go. After the shed had been changed to the inventory transfer leverage, there was basically no space for maneuver. Now the theme of this era is to persist in deleveraging, first to reluctantly contract, to ensure that there are no big problems inside, and then a protracted war. The revoking of PSL approval is also within this framework.

The shed change this bring their own people's livelihood attributes, the old man took this honest person to catch the ride of the times, and those long-sleeved dances want to hitchhiker, frying three or four lines of housing prices cut a leeks, put themselves in the masses of the sea of ​​people That's the opposite of this era.

The times are the background of our destiny. Believe, fate leads; unbelieving, fate drags away.

Hangzhou Housing Lottery Results: One Man Wins 5 Homes

The man says he's lucky and he didn't break any rules. He created different companies and bought the homes through the companies.

Once again showing Chinese ingenuity when it comes to bureaucratic rules and another reason to doubt the housing lottery's efficacy.

iFeng: 我就是运气好!”摇中杭州5套房的周先生回应了:我没违法
"I'm lucky!" Mr. Zhou, who shakes the five suites in Hangzhou, responded: I didn't break the law.

Three weeks in three shakes, became a net red

Soon, his more information was picked up by netizens.

The company he participated in to shake the house to buy a house includes

Hangzhou Yuele Automobile Service Co., Ltd.

Hangzhou Yuegao Automobile Service Co., Ltd.

Hangzhou Yule Automobile Service Co., Ltd.

The legal representative of these three companies

Are all the same name

Zhou

CDB Change to Lending Policy

English coverage of the shantytown renovation policy change.

Reuters: China Development Bank tightens approvals for property redevelopment programme
China Development Bank (CDB) has halted funding for new shantytown redevelopment projects, and has transferred approval authority from its local branches back to the policy bank’s headquarters, a source at the bank told Reuters late on Monday.

The source said new funding is being reined in due to concerns about risks associated with rising debt for local governments, the primary recipients of the loans used to fund shantytown redevelopment.

Existing projects are operating normally, said the source who spoke on condition of anonymity.

“Authority to approve shantytown redevelopment projects and sign contracts used to be at the branch level...But that has all gone back to headquarters now,” the source said.
“Overall, we think that CDB may tighten the approvals of new shantytown redevelopment projects,” analysts at Guotai Junan Securities said in a note on Tuesday.

“As a result, 2018 housing sales in lower tier cities are expected to be lower than our previous expectations”, the analysts said, although they expect demand for homes to stay strong.
There's nothing new here that wasn't covered in the Chinese articles I posted here: Updated: China Development Bank Cuts Off Funding for Shantytown Renovation

China was boosting housing demand by bulldozing existing homes. If it stops lending money for bulldozing efforts by local governments, then home sales will fall. Assuming there was some real substandard housing at the outset, but now it is likely the case that governments were in full blown broken windows mode, knocking down existing housing either to "create" GDP growth. The end result of which is an economy that cannot finance the rising level of debt.

One or Two More RRR Cuts in 2018

21st Century Herald: 央行再次创新性定向降准,年内或仍有1-2次降准
In addition, there is still a general view that there are still downgrade operations in the future. Wen Bin, chief researcher of Minsheng Bank, said that there is still room and direction for the directional downgrade in the next phase, and there may still be 1-2 directional downsizing operations by the end of the year.
There are still 1-2 drops in the year or
Along with this orientation, the orientation of monetary policy has been discussed. One of the discussions is whether monetary policy has been loosened.

This argument is not without a basis. First, the official expression of current liquidity has changed. On June 20, the executive meeting of the State Council stated that it was "reasonably adequate". Before that, it was "reasonable and stable," and earlier it was "basically stable." Secondly, from the perspective of the central bank’s operation, the current RRR cut is the third time in the year. In addition, MLF collateral can be expanded in May and the central bank overran MLF in June.

However, a number of respondents believe that the tone of a stable and neutral monetary policy has not changed, but changes in the structure and margins. Even Lian Ping said that last year was running in the tight direction of the DPRK, but now it is in the loose direction. “From the results, under strong supervision and de-leveraging, liquidity is not reasonable and moderate, but it is tight. If we do not adjust for biased direction, the actual state of monetary policy will be tight.”

"Monetary policy needs to make some adjustments according to the economic situation. Now that entity financing is relatively difficult, trade frictions are still heating up, and economic growth is facing greater downward pressure, so under the sound and neutral tone, it is necessary to fine tune monetary policy. Xu Gao said.

Wang Qing, deputy general manager of the Oriental Jincheng Research and Development Department, believes that during the year the central bank’s policy and rhythm will be fine-tuned by the camera, or it will continue to be reduced by 0.5-1.5 percentage points, which is equivalent to one or two reductions. “The future still needs to be reduced. Now under the strong regulatory environment, the off-balance-sheet transfers have more bank credit than banks’ capital funds. In this case, it is necessary to reduce the bank’s interest rate to allow banks to have more lending capacity.
This will weaken the yuan and indicates "strong" dollar, deflationary pressure remains a serious concern. None of these anticipated RRR cuts are easing, but instead designed to offset the tightening caused by the deleveraging efforts.

China's ace in the trade war isn't devaluation because it is a weapon against America, but because it is a tool for rebooting the Chinese economy and deleverages the economy in one fell swoop. Along with the trade war, it would force a rebalancing of China's economy.

Narrative Shift on Trade War

Finance tends to be more level headed because there is money at stake. People have skin in the game and don't want to lose money.

Macrobusiness: China is overreaching in war with US
China is already playing with incendiary stuff by dropping the yuan. Not just as a provocation to Trump but in response to Fed tightening. If it continues then capital outflow will intensify and it risks setting alight its great pile of forex reserves. Trump could even weaponise the Fed. A few more tariffs and some infrastructure stimulus and he’ll entrench US inflation, driving US interest rates higher and blowing up the Chinese external account like some common emerging market. Financial crisis will ensue and China will be set back a decade or be pushed into a permanent Japanese-style stagnation and middle income trap.
I posted one article back in April: Chinese Media: China Loses All Out Trade War

Bloomberg: China Begins to Question Whether It’s Ready for a Trade War

I wrote China Walks Into Trade Trap and China Enters the Trade Trap because whether intentional or not, it is a trap for China. The United States has had a horrible economic policy for at least 20 years, if not 40 or more. China benefited greatly. As Trump saw it, they were probably wondering how they were getting away with everything and not facing any pushback. Now President Trump is pushing back. As shown in prior posts, he has deep support. A trade war probably will increase his popularity, not decrease it, because the public wants a fight on this issue. They care more about changing economic policy than the immediate impact of slower economic growth.

For China, the best policy is to avoid confrontation with the United States because as I laid out in The Logic of Strategy: Yuan Devaluation and the Road to Trade War, a trade war with China could escalate into a full-blown geostrategic containment policy. However it starts, the Logic of Strategy supports an emerging order, a new policy of containment for the U.S. and regional allies such as Australia, Japan and countries generally wary of China's rise such as Vietnam. It is in China's interest to short-circuit this process by defusing the situation.

Civil War Discussed in USA Today

All I can add to this is that these are the good times, the happy days. Mood is going to turn a lot more negative. It is going to get very violent in the USA. If you want to be away from it all, living abroad isn't a bad idea. Pick a country that is internally stable, not one that is stable because of U.S. military, economic or political support, because that support will end once the crisis hits. Another option is to follow Marc Faber's advice: buy a farm and a machine gun. Alternatively, blend in with whatever is the majority in your area. If the people fly PRIDE and Black Lives Matter flags, fly that. If Confederate or Gadsen flags, fly that. You will not want to stand out from the crowd when the mob arrives.

USA Today: Is America headed toward a civil war? Sanders, Nielsen incidents show it has already begun
The other day, author Tom Ricks asked whether we’re heading toward a civil war. "I don’t believe we’re to Kansas of the 1850s yet. But we seem to be lurching ... in that direction,” he wrote.

Ricks was commenting on “What Democratic rage would look like,” a Bloomberg opinion column that quotes political scientist Thomas Schaller as saying, "I think we're at the beginning of a soft civil war. ... I don't know if the country gets out of it whole."

That sounds pretty serious. The column by Francis Wilkinson presents a catalog of things Democrats are mad about — from the existence of the electoral college to Trump’s “propaganda apparatus” — and predicts that if Democrats lose the midterm elections, there will be hell to pay. (And Republicans, you know, could make a similar list of their own complaints.)

“I don't know exactly what that would look like," Wilkinson writes. "But liberals have a great deal of cultural, academic and economic heft, stretching from Hollywood to Harvard. Just this week, someHollywood powerhouses flirted with leveraging their clout against the Trumpist Fox News. There are endless variations on such a power play. If Democrats opt to use their power more aggressively — breaking rules — Schaller's soft civil war hardly seems unlikely.”

The civil war is already starting

Well, actually this sort of thing seems to be well underway. Hollywood has basically turned its products, and its award shows, into showcases for "the resistance." Americans are already sorting themselves into communities that are predominantly red or blue. And in heavily blue Washington, D.C., Trump staffers find that a lot of people don’t want to date them because of their politics.

White House press secretary Sarah Huckabee Sanders was even kicked out of the Red Hen restaurant in Lexington, Virginia, because the owner and employees disliked her politics. This seems like a small thing, but it would have been largely unthinkable a generation ago.

And, in a somewhat less “soft” manifestation, Homeland Security Secretary Kirstjen Nielsen was bullied out of a restaurant by an angry anti-Trump mob, and a similar mob also showed up outside of her home.

Will it get worse? Probably. To have a civil war, soft or otherwise, takes two sides. But as pseudonymous tweeter Thomas H. Crown notes, it’s childishly easy in these days to identify people in mobs, and then to dispatch similar mobs to their homes and workplaces. Eventually, he notes, it becomes “protesters all the way down, and if we haven't yet figured out that can lead to political violence, we're dumb.”
Bonus: Bigoteering from the media and establishment. Click through for the video. MONTAGE: MEDIA TURNING TRUMP VOTERS INTO PUBLIC ENEMY NO. 1

Establishment Collapse: Trump Rises in Polls, Harley Workers Support Him

It's too early to say it is over, but the pedophrasty and moral panic over the child separation at the border could mark the real turning point for the establishment and The Narrative. President Trump's poll numbers went up, not down.

BI: Trump's poll numbers are surging as he faces some of the biggest controversies of his presidency
But even as some officials in the Trump administration are shouted out of restaurants and called fascists to their face, Trump's polling numbers have been steady — even rising — over the past several weeks.

Both a Gallup poll and the RealClearPolitics average of polls put Trump around a 45% approval rating, with that number rising steadily throughout June. That's just 1 point lower than President Barack Obama polled at this point in his presidency.

Over the same period, Trump's border practices drove at least one mainstream news anchor to tears and sparked round-the-clock coverage of family separations. Other than Trump's policy of separating migrant families at the border, which he reversed amid the scrutiny, analysts say his overall immigration policy looks a lot like Obama's.
Trump is also rising in Florida, a key state in the presidential election: Poll: Trump approval numbers rising in Florida

Only a week ago, amid the crisis, I posted: GOP Can Sweep Midterms With Hardline Immigration. And not too surprisingly, Trump shifted from sounding conciliatory amid the moral panic to a hardline on illegal immigration: Trump Goes All-in on Immigration, Moral Panic Intensifies

This week Trump further escalated saying he wants illegal aliens who cross the border illegally to be immediately deported. No court cases: Trump says illegal immigrants should be deported with 'no judges or court cases'

Meanwhile at Harley-Davidson, the workers are siding with Trump and against management.

ZH: Most Harley-Davidson Workers Back Trump, Blame Only The EU
But this decision hasn't translated into worker anger directed at the president. An informal survey of workers during a smoke break at the factory by the FT found that most - if not all - support President Trump's bid to revive American manufacturing by instigating a trade fight, even if Harley's EU sales have risen as a percentage of the company's overall sales in recent years.
As I've warned, negative social mood will tend to support a trade war. When mood is negative, conflict and tensions rise. If the public enters "war mode" on the trade war, then they will not care about economic losses in the short-term anymore than they care about losing lives, material and wealth in a real war. Real wars are as stupid as trade wars using strict accounting. Yet countries repeatedly go to war.

Independent Analysis

Let me take a moment to review some predictions made on this blog. I said immigration would become a big issue at least as far back as 2012. That's the earliest post I could find, although I'd been thinking about it longer. By 2014 I warned it was going to hit the U.S. In 2014, I saw President Trump coming. I bet on him to win. I made a ton of money doing it. I saw yuan devaluation coming long before it happened and in my opinion, the big devaluation hasn't happened yet (nor is it due to the trade war). I saw a trade war with China coming, along with the breakdown of popular and academic support for free trade. Back at least as far as 2014, when I wrote that post. I saw the coalition that would bring Trump to power. I saw the Treasury and Washington descending, manufacturing and national security ascendant.

I don't own a time machine and I don't have occult powers. I have a couple advantages on the experts though. One is I don't believe The Narrative.

Pedophrasty, Bigoteering, and Other Modern Scams
Bigoteering

Originates with Tim Ferriss, describes tagging someone (or someone’s opinions) as “racist”, “chauvinist” or somethinglikeit-ist in situations where these are not warranted. This is a shoddy manipulation to exploit the stigmas accompanying such labels and force the opponent to spent time and energy explaining “why he/she is not a bigot”.

Note that it is the true victims of racism that are insulted by virtue-peddling bigoteers.

Example: Both the Kurds who are asking for independence and the Arabs who refuse to grant it accuse one another of “racism”. Likewise, Arabists accuse localists (such as those who claim Phoenician or Coptic culture and habits away from Arab domination) of racism, forgetting that Arabism is grounded in a fundamentally imperialist and supremacist ideology. A localist wants others to leave him alone (leave me alone, I leave you alone, thus executing the moral symmetry of the silver rule), while Arabists want non-Sunni minorities to be their dhimmi servants or second class citizens under the cover of “nonsectarianism”.
The establishment in the West is in full on collapse. Fundamental collapse down to its core. This is a multi-century event, not a short-term one. Flaws in the Enlightenment are being exposed by science, and yet most of the establishment doesn't even believe in the Enlightenment anymore, at least not the American founders' version. They believe in equality, the French Revolution version that unleased communism and fascism in the 20th Century. On the other side, anyone who points out the Emperor Has No Clothes is hit with a bigoteering attack. The Establishment and The Narrative are doing industrial-scale bigoteering.

It's not enough to realize The Narrative creates a false picture of reality. The next step is trying to see reality clearly. To do that, you need a highly objective way of organizing and sorting through information. To make predictions, you need a way to model the future. Demographic changes and similar data are useful, but a key variable that has helped me is Socionomic theory. It posits that mood drives and influences human society. It allows you to make two predictions, one for a rising mood and one for a falling mood. Since mood was trending negative, I could predict trade wars were coming. I could see that immigration policy was extremist and going to blow up in the establishment's face. If social mood was rising, I would not predict a trade war or immigration restrictions. Candidate Trump would have fizzled out like Dick Gephart and Pat Buchanan did in the last 1980s and early 1990s. Trump's message wasn't far removed from those candidates, but his vote total was because social mood had declined greatly over three decades.

Nassim Taleb calls much of the establishment "intellectual yet idiots" or IYIs. Not every mainstream expert or pundit is clueless, but there's a very good chance many are dummies parroting The Narrative to protect their sinecure. When someone argues that mass immigration policy is a net negative, the "establishment" doesn't dig into the numbers to find out the truth. They call the person a racist or a Nazi and move along. Even if the people doing this at the start were smart, it has really dumbed down the establishment over the decades. Opponents of The Narrative have to debate from a young age and never stop. The Establishment lives in a safe space where debate is forbidden. Opponents have to dig and find every piece of evidence for every one of their claims. The Establishment can call you a name and "win."

I'll finish with another prediction. Many people think Trump will lose support if the stock market falls and the U.S. economy goes into recession. Yet look how the workers at Harley are responding to a tough economic situation. They aren't bolting from Trump, they're supporting him more. When/if the stock market crashes or goes into a bear market, and there's some fraud uncovered, shenanigans, the Federal Reserve drops the ball as it always does...President Trump won't bail them out. He might jail them. After seeing the establishment defend Wall Street at the expense of Main Street for a decade, do you think voters would run from Trump, or embrace him all the more tightly?

Once voters have a non-establishment choice they will vote for it. Italy's new government has picked a fight with the EU on immigration and moved towards deporting all migrants in their country. The parties are polling at a combined 60 percent. They are the new political establishment in Italy. Support may even rise if mood turns more negative and the economy sours because economics declines as an issue. Moreover, 10 years of a depression makes voters less sensitive to economic pain. If the stock market falls 50 percent, many of the populist voters won't notice. They are on government assistance or work in jobs that are recession resistant because any job that isn't is already gone. They might see things like gas prices and rents go down.

It goes against everything I've witnessed in politics to this point, but the old model of politics doesn't work anymore. These are "revolutionary" times. Even still, it's a stretch. I offer it as an extreme example of how far mainstream thinking is from actual events. Whether I would bet on support rising in an economic downturn depends on the odds offered. Everything is a probability. That said, I'm rather confident that if the economy weakens, the establishment and The Narrative will be out screaming its the end of Trump or whatever "populist" is in power at the time, and that will make for some pretty good odds.


2018-06-25

Updated: China Development Bank Cuts Off Funding for Shantytown Renovation

Update: 棚改政策调整!国开行全面上收棚改审批权
In the evening of the same day, the Information Office of the CDB responded to the 21st Century Business Herald that since this year, the Development Bank has strictly implemented the country's policy on shed change, and cooperated with local governments in compliance with laws and regulations to carry out shed financing reform work under the guidance of the relevant ministries and commissions of the State Council.

...The 21st Century Business Herald reporter verified from the National Development Bank office that the branch of China Development Bank suspended the approval of the shed reform project, and that the approval authority of the head office was true. The so-called “shed change” refers to the reconstruction project of urban dilapidated houses to improve the housing conditions for families with difficulties.

"Originally, most of our mid- to long-term project approval authority was in the head office, and it depends on the amount. Now it is said that the approval rights of the shed change project will all be received first, and the new project will basically be suspended for approval. However, the stock items that have already been released are still as usual." According to a person from the said country’s operating bank, “As for the approval in the future, it is still unknown.”

Another source pointed out that the shed change loan has not been completely halted, but because the China Banking Regulatory Commission recently reviewed it at the National Development Bank, the PSL approval authority of each local branch was temporarily recovered by the head office. After the head office's policy is clear, it will be issued normally. And as long as the project PSL that was included in the shed change plan at the beginning of the year is still in normal development, it will not be affected by this policy adjustment.

According to an analysis of the reporter from the 21st Century Business Herald by the above-mentioned National Bank of China, the approval of the shed reform project was suspended or related to the fiscal system's remediation of local government liabilities. The special fund for currency resettlement for shed change is mainly provided by China Development Bank, and the provincial-level financing platforms in each locality are responsible for the overall repatriation.
With one hand (MLF expansion and RRR cut) China giveth liquidity, and with the other (PSL) it taketh away. The bigger story is why the CDB head office took over PSL lending: local govt debt concerns.

Original post below:

One of China's strategies for reducing housing inventory in recent years was to renovate substandard housing. Bulldoze shantytowns and replace them with new development. This program has been ongoing for a few years, but now there's word that possibly out of concern for local government debt levels, the China Development Bank will no longer lend money for some government projects, halting lending through commercial and state-owned banks to local governments. According to this article below, originally from 21st Century Herald, the CDB has not yet answered reporters' inquiries.

iFeng: 国开行回收棚改审批权限?政府购买服务实质影响融资进展
According to the Deputy Minister of Housing and Construction Lu Kehua in an interview with reporters in 2017, the proportion of monetized resettlement in the country's shed change was 48.5% in 2016, an increase of 18.6 percentage points from 2015, and 250 million square meters of housing can be purchased from the market. There is currently no official national data for 2017.

A branch of a large state-owned branch of Shandong Province told a 21st Century Business Herald reporter on the 25th that at present, China Development Bank has not obtained relevant information on suspending and approving shed renovation projects. According to its understanding, the relevant shed change loan policies and quotas have not been greatly adjusted. However, the main variable is that, in order to regulate local fiscal liabilities, the financing of shanty-salvage projects with government procurement services is suspended.

“Whether it is the CDB or our commercial bank, the past contract for the government’s purchase of services can no longer be issued. We have issued a letter. Without this contract element, we can’t lend money. So we stop and wait for the next step on the government’s budget. There is no new trend.” The branch president also said that the essence of the issue is whether the government itself has the financial resources to support financing.
The stop may also be due to local governments hiding their debts:
Can be corroborated with this is that a person in Zhejiang Province's financial system said that this year, the Provincial Department of Finance "more than three years of shanty renovation is a disguised form of debt" identification policy, to a certain extent, affected the local shantytown financin, as a result, individual projects have been restricted from financing because they are not included in the list of provincial shantytown renovations. At the same time, due to the fact that the finance department, especially the Provincial Finance Department, has not yet finalized the policy of financing the shantytowns, a small part of the shed change loans will be placed on a wait-and-see or slower rhythm. It is expected that the demolition and relocation compensation will be affected in time and in full.
JRJ: 国开行:至5月发放棚改贷款4369亿 各项工作有序推进
The famous financial blogger Caoshan Stone said that the approval of the PSL (supplementary mortgage loan) was suspended and the head office was waiting for a new policy. Microblogging users said that this means that the shantytown renovation is completely halted. A person who is close to the CDB said that he had not heard about the suspension.

Some microblogging netizens said that the branches of Shanghai CDB and Shanghai have feedbacked on the normal issuance of PSL. And what I learned now is:

1. Most of the PSLs are still being issued, and the old quotas are still being issued.

2, the new credit assessment is more stringent, this specific means that according to the project approval, the frequency is to meet the conditions for credit, not a fixed frequency credit;

3, PSL's contract approval authority has got the head office to go.

Netizens also said that they had contacted the old leader of the Sichuan Housing and Urban-Rural Development Department. It was not a matter of stopping the sheds and changing the monetization. It was the pressure of shrinking psl capacity and the design of two new financing directions.

Base money delivery channels will change, and shed change will come to an end

From 2015 to 2016, the renminbi faced greater depreciation pressure. The central bank began to introduce MLF and PSL operations. The peak liquidity of the two types of operations released exceeded 7 trillion yuan (nearly 8 trillion yuan). To a large extent, he hedged the base currency of foreign exchange collection channels and maintained relatively stable market liquidity.

For the MLF, the central bank has expanded its collateral range on June 1st, so the MLF has more room to use. However, the monetization of sheds in the PSL and the problems it has brought have received more attention. As the PSL of the shed change monetization important placement mechanism, the new balance in the first quarter of 2018 exceeded 300 billion yuan, which is nearly double the first quarter of 2017. Since the beginning of the year, prices in the third and fourth-tier cities have continued to rise. However, since entering the second quarter of 2018, it can be seen that the new balance of the PSL has apparently dropped, and it is expected that the increase in the second quarter of 2018 will be basically the same as the previous year.
 In this case, since the depreciation pressure is fully under control and it is expected that there will be follow-up strike reduction measures during the year, the role of PSL as a base money channel will be reduced. The targeted reduction measures mainly focus on debt-to-equity swaps , financing for small and micro enterprises, and other issues. Therefore, in the process of launching PSL, real estate in the third and fourth tier cities was closer to the currency faucet; in the process of a new round of directional RRR cut, the real estate in the third and fourth tier cities was further away from the faucet, and the corresponding shed change boom Or will come to an end.

Back in 2014, ZH covered the launch of PSLs: Is This China's QE?
Shortly after we exposed the real liquidity crisis facing Chinese banks recently (when no repo occurred and money market rates surged), China (very quietly) announced CNY 1 trillion of 'Pledged Supplementary Lending' (PSL) by the PBOC to China Development Bank. This first use of the facility "smacks of quantitative easing" according to StanChart's Stephen Green, noting it is "deliberate and significant expansion of the PBOC's balance sheet via creating bank reserves/cash" and likens the exercise to the UK's Funding For Lending scheme. BofA is less convinced of the PBOC's quantitative loosening, suggesting it is more like a targeted line of credit (focused on lowering the costs of funding) and arguing with a record "asset" creation by Chinese banks in Q1 does China really need standalone QE?
Background on the renovation loans from the CDB: New Urbanization
(2) Supporting shantytown transformation focusing on shantytowns in urban areas and “villages within cities”. As of the end of December 2015, CDB granted an aggregate of RMB 1555 brillion of shantytown loans, of which RMB 750.9 billion was granted within the year, contributing greatly to the early completion of 5.8 million shantytown transformation units across the country. RMB 236.7 billion were granted for monetized resettlement, resulting in a reduction of about100 million square meters of existing commercial housing properties nationwide. Priority was given to shantytown transformation projects in coal mining subsidence areas, state-owned mines, forests, reclamation areas, resource-exhausted cities and areas with a high concentration of tier-3 enterprises in central, western and northeastern regions, with RMB19.4 billion of loans granted to shantytown transformation projects in mining subsidence areas in the Northeast. As a result, construction of all shantytown transformation projects in mining subsidence areas in Heilongjiang’s “four coal mining cities” commenced on schedule.