Please or Register to create posts and topics.

The Next Global Finance Disaster is Underway

Greatest Debt Danger Not Where You May Think

Following the September, 2008 bankruptcy of Wall Street giant Lehman Bros, world central banks, led by the US Fed, began an unprecedented monetary experiment known as QE or Quantitative Easing. The result was global interest rates at or below zero. Fourteen years of hyper low interest rates led to buildup of huge speculative bubbles globally, which lasted until 2022 when the Fed began to reverse, and raise rates at a record pace. That has left companies and governments globally exposed to default or worse. No country is more exposed to the danger of a collapsing financial system than the world’s largest debt-holding nation, the Peoples’ Republic of China. That multi-trillion dollar pyramid of debt is now in a slow-motion implosion. The implications for the global economy are alarming. Read what is the too little-known real state of China’s super economy.

More evidence of the collapsing China economy

These Five Niche Commodities Signal China's Recovery Faltering

Tyler Durden's Photo

THURSDAY, JUN 01, 2023 - 10:25 AM

China's economic recovery from draconian zero-Covid controls is faltering. Investors had very high hopes earlier this year that the world's second-largest economy would roar back to life and help offset weakness in the global economy. However, six months later, those same hopes have faded into disappointment.

One of the most immediate warning signs investors are losing faith in the recovery narrative is the Hang Seng China Enterprises Index fell into bear market territory Tuesday, down about 20% from its Jan. 27 peak.

While equities are important to track, we shift attention to sliding commodity prices that might give further input about China's economic growth miracle seen over the last several decades, which has yet to reemerge and ignite a spark. Maybe that's because of an aging population or declining workforce or supply chain reset, or enormous debt loads -- whatever is hobbling China's recovery effort might indicate the days of expanding at 6% to 8% a year are over and only 2% or 3% is the new normal.

On the commodity front, two of the most important commodities to China's economy, copper and iron ore, have been moving lower over the last several months. But five often overlooked commodities essential for economic growth send chilling signs of economic alarm.

"Futures markets for items as diverse as glass, styrene and corn starch are piling on the evidence that China isn't recovering as fast as many people had hoped, after Beijing abandoned the pandemic restrictions late last year that were crushing its economy," Bloomberg said.


China accounts for more than half of the world's plate glass production thanks to the rapid growth of high-rise buildings and vehicle sales in recent decades. Similar to other industries, low margins and supply gluts have troubled producers for years, forcing them to cut output in recent months.

The situation this year looks even more challenging. Glass futures on the Zhengzhou Commodity Exchange have plunged nearly 20% in the past month, a period when demand usually picks up. The reasons include China's teetering property market and weaker-than-expected vehicle output in April. 

Trucked LNG

China has a vast requirement for natural gas, carried by sea from mega-projects in far-flung places like Qatar and Australia, or over pipelines that stretch across continental Asia. But the last few miles to consumers is often via trucks that criss-cross China's cities, a barometer of the immediate needs of industries from glass-makers to ceramic factories.

That price has fallen to its lowest level in almost two years. Demand is so weak that the nation's top importers of seaborne liquefied natural gas are even offering to resell their shipments abroad. 


Fewer home buyers also means less demand for the purchases that often accompany a new place to live. The price of styrene monomer, a material used for the plastics and rubber that go into appliances like fridges, has declined. China has been the world's fastest growing market in the past decade with capacity climbing to over 40% of the global total.

Dalian futures fell last week to their lowest since February 2021, after a near-5% drop in home appliance sales in the first quarter, according to the National Appliance Information Center. The problems are slower growth in personal incomes and a "low-frequency sales cycle" for white goods, according to Wu Haitao, a director at the center.

Corn Starch 

Corn starch has a wide variety of uses, in soft drinks, as a thickening agent for sauces and in the paper and textiles industries. China produces almost 50 million tons a year. 

Although retail sales have outperformed other economic measurements in the months since China's Covid Zero restrictions were lifted, they grew at a slower pace than expected in April. China's falling population is another headwind: corn starch is a key ingredient in baby formula.

Paper Pulp 

Shanghai pulp futures went into free-fall in February after a sudden recovery in production at paper mills after the Lunar New Year holiday was augmented by resurgent imports. Domestic demand, which was also supposed to rise after China's reopening, couldn't keep up.

As with many commodities, China is the biggest producer and consumer of pulp, used for packaging, publishing and household goods. But the market is so vast that a lot of pulp and paper also needs to be sourced from abroad.

Meanwhile, China's macro data has failed to show the reopening narrative coming to life.

The faltering recovery led to China's central bank announcing an unexpected cut in mid-May to the amount banks set aside for deposits by 25 basis points, vowing to keep ample liquidity in the interbank system and better fund the real economy.

So the question remains: What's next for the global economy if China's highly anticipated economic rebound doesn't materialize?

Not sure if you are aware, but Zerohedge is run out of Bulgarian intelligence.

Thanks . I was aware of it. I am not endorsing ZH but they sometimes have useful articles on financial markets that the mainstram financial press (owned and controlled by the jews btw) ignore. The financial collapse of the Chinese economy being a case in point. The ZH article read in conjunction with the first post gives a glimpse of the real condition of the Chinese economy, which runs counter to all the shills calling an end to the US$ hegemony and de dollarisation, to be replaced by the yuan/ruble etc.. (and yes ZH is one of the chief shills of de dollarisation).