The "Chinese" Manhattan

Bloomberg reports: China Debts Dwarf Official Data With Too-Big-to-Finish Alarm.

A copy of Manhattan, complete with Rockefeller and Lincoln centers and what passes for the Hudson River, is under construction an hour’s train ride from Beijing. And like New York City in the 1970s, it may need a bailout.

Debt accumulated by companies financing local governments such as Tianjin, home to the New York lookalike project, is rising, a survey of Chinese-language bond prospectuses issued this year indicates. It also suggests the total owed by all such entities likely dwarfs the count by China’s national auditor and figures disclosed by banks.

Bloomberg News tallied the debt disclosed by all 231 local government financing companies that sold bonds, notes or commercial paper through Dec. 10 this year. The total amounted to 3.96 trillion yuan ($622 billion), mostly in bank loans, more than the current size of the European bailout fund.

The planned 15.2 million square meters (164 million square feet) of office space by 2020 in Yujiapu and across the Hai River in Xiangluo Wan, or Conch Bay, is more than one-third of the 450 million square feet in Manhattan.

One-third the size of Manhattan office space, and completely fuckin' empty! Completely!

Ponder that, fuckers, don't just sit there, ponder it.

How can this not end badly?

Anyone who is long the Chinese yuan in any form whatsover (and the EE is looking at you, Jim Rogers!) is going to get their fuckin' clock cleaned.

There is no China miracle. It's all the illusion of debt financing, and when it comes crashing down (no later than mid-2013 and most likely sooner), remember you heard it here a long time ago.

Ditto for India and Brazil. There is no "Indian miracle" or "Brazilian miracle". It's all the smoke 'n mirrors of a ton of debt.

PS :- It was obvious what drove commodities all along, wasn't it? Please maintain a moment of silence for both Canada and Australia. Ruthless ass-poundin's in technicolor await.

India Rising

From the Washington Post: Indians Trapped by Debt as Easy Money Dries Up.

In the past two months, Ravinder Raina tossed and turned on many sleepless nights trying to re-do the math of his family's monthly expenses.

Rising mortgage payments, soaring inflation and fuel prices were beginning to put the squeeze on the spending spree he'd taken for granted for the past four years. So after painstaking discussions with his wife, he drew up a list of expenses to cut. The family would stop buying famous-brand clothes. They would not window-shop if they did not need anything. They would use credit cards less and replace their gasoline-fueled car with a vehicle that uses cheaper natural gas.

The past four years have brought India economic growth of seemingly unstoppable momentum, often 9 percent a year, helped along by big inflows of foreign investment. Rising incomes and low interest rates enabled many middle-class Indians to realize the dream of owning a home, even while still in their 30s.

Trapped in debt, many middle-class Indians are struggling to cope. Raina's monthly mortgage payment has gone up by 12 percent. "I have to cut corners now, or I may not be able to pay back my loan before retirement," he said. Payments on some loans have doubled since 2004, when interest rates were at a record low.

"The boom of the last four years mesmerized them to live beyond their means," said Deepak Raheja, a therapist who runs a support group called the Hope Foundation. "In the past ten weeks, I am getting five to six new patients every week with financial worries about mortgages, loan repayments and credit card bills. All in the age group of 25 to 40. They exhibit anxiety, helplessness and depression. Some even contemplate suicide."

"The Indian middle class is now deferring purchase decisions because they are locked in the rising mortgage trap from multiple loans. They did not anticipate this cash crunch. They thought India's growth story would only go up, up and up," Bijoor said.

Gee, where have we heard that "up, up, up" before?