"Unskilled structural engineers learning by doing. Soft, soggy silt soil sinks soon. Leaning Tower of Pisa fast forward."
Friday, December 6, 2013
Tuesday, December 3, 2013
Posted by CP at 3:28 PM
Monday, December 2, 2013
“Weaker credit is traveling down to smaller companies that ordinarily would not have this kind of leverage.”
A correspondent sends a link to "A New Credit Boom" in the NYT.
Posted by CP at 4:53 PM
"Shunfeng Photovoltaic International to pay for Wuxi Suntech purchase with USD 460 million convertible bond issue"
A correspondent writes,
"Check out the terms of the [Shunfeng Photovoltaic] convert deal. The mysterious Mr. Cheng is taking 2/3rds of the deal, convertible at a 40% discount to the last close, senior unsecured piece of paper, zero coupon, non convertible for the first six months. It can be put or called after 5 years. If the stock goes nowhere for 5 years it is a 12% return for the convert holders. How's that for corporate governance?"The Shunfeng stock price was down ever so slightly. Here's a news story on the deal - sounds terrible for existing Shunfeng shareholders.
Of course, we are in a mania right now and even though photovoltaic solar panel manufacturing is a hopelessly unprofitable business [especially when you "own" Chinese plants through Cayman Island shell companies], retail has an inexplicable yet fierce attachment to anything involving solar energy.
Posted by CP at 4:39 PM
Wednesday, November 27, 2013
Short interest on Nov 15 was about 12 million shares, down significantly. Looks like a lot of shorts must have covered at around 45 cents.
This should result in a lower cost to borrow, fewer or less dramatic squeezes, and fewer natural buyers of the stock.
Posted by CP at 12:21 PM
Tuesday, November 26, 2013
Responding to How Much of Chinese Banks' $24 Trillion in Loans Are Bad?, a correspondent writes,
Here's a hint of how it will end badly: In the Japanese bubble in the 80s, America was overcome with Japanophilia and business leaders and schools were talking about how to be more like Japan to benefit like they were. One major suggestion was the fusing of public and private interests in cooperative organizations (fascism).Another correspondent writes,
Eventually, the bubble collapsed and people stopped worrying about how to emulate Japan.
The same thing has happened with China. It was all the rage in 2010/2011 when the bubble there was really gathering steam, for people high up in the US government and in major US educational institutions to marvel at the "Chinese Miracle" and they were all discussing how to emulate the Chinese Method. State Capitalism seemed so... successful... over there. And again, there was a clamoring for public-private partnerships.
We'll see what kind of mea culpas come out of this one.
Anyway, this is a classic Keynesian scenario-- China is so wealthy with empty lodgings the only real problem is how to distribute it equitably. Right?
"China is based on lies and violence. So it will crash. We should plan for that and exploit it in a way that does not count on its courts."
Posted by CP at 3:30 PM