China have accused the United States of violating international law as a US destroyer was spotted sailing within 12 nautical miles of the disputed islands in the South China Sea on Saturday. The U.S. military have admitted sailing past the disputed island, saying it was asserting its freedom of navigation. “We conducted a freedom of navigation operation in the South China Sea earlier tonight,” Pentagon spokesman Jeff Davis said in a statement.
Over the past year, we have frequently warned that the biggest financial risk (if not social, which in the form of soaring worker unrest is a far greater threat to Chinese civilization) threatening China, is its runaway non-performing loans, which at anywhere between 10 and 20% of total bank assets, mean that China is one chaotic default away from collapsing into the post "Minsky Moment" singlarity where it can no longer rollover its bad debt, leading to a debt supernova and full financial collapse.
Submitted by Jeffrey Snider via Alhambra Investment Partners,
It makes for quite the juxtaposition, though perhaps not so jarring given that global banks are still enormous and disparate operations. On the one hand, Citigroup’s CEO was eminently confident from within the confines of Davos and the status quo:
Make no mistake, investors didn’t need any more reasons to be bearish on Chinese equities.
Mainland markets are veritable casinos dominated by retail investors who until last summer, were enthralled with the prospect of easy riches in an environment where shares only seemed to know one direction: up.
Via Scotiabank's Guy Haselmann,
By surprising markets with a move to a negative deposit rate, the Bank of Japan gave investors temporary reprieve, providing a much needed opportunity to pare portfolio risk at better prices. Unfortunately, the improvement in financial asset prices will be short-lived; except, of course, for long-maturity Treasuries.