Topic: Martin Armstrong Discussion - page 347. (Read 647188 times)

China unveils details of state-firm reforms as growth sputters

China unveiled details on Sunday of how it would restructure its state-owned enterprises (SOEs), including partial privatization, as data pointed to a cooling in the world's second-largest economy.

The guidelines, jointly issued by the Communist Party's Central Committee and the State Council, China's cabinet, included plans to clean up and integrate some state firms, the official Xinhua news agency said. It did not elaborate.

Reform of underperforming state-owned enterprises is one of China's most pressing needs. But if not handled well, the restructuring could lead to hundreds of thousands of people being laid off and social instability.

Xinhua said the plans included introducing "mixed ownership" by bringing in private investment, and "decisive results" were expected by 2020.

The government will not force "mixed ownership", nor will it set a timetable, giving each firm the go-ahead only when conditions are mature, it said.

"This reform will be positive for improving the impetus of the economy and making growth more sustainable," said Xu Hongcai, director of the economic research department at the China Centre for International Economic Exchanges (CCIEE), a Beijing-based think-think.

Partial privatization, he added, would help establish "check-and-balance and incentive systems" at state firms.

China's government manages 111 companies centrally under the State-owned Assets Supervision and Administration Commission, or SASAC. Local governments own and manage around 25,000 state-owned companies and the sector employs nearly 7.5 million people.

State firms will be allowed to bring in "various investors" to help diversify share ownership, and more state firms will be encouraged to restructure to pave the way for stock listings, Xinhua said.

Private investors will be encouraged to buy stakes in state firms, buy convertible bonds issued by state firms, or swap shares with state firms, it said, adding steps will be taken to curb corruption during reforms.

SOEs will be divided into commercial and public welfare-related businesses during the reform process. Oil and gas, electricity, railways and telecommunications were identified as sectors that could be suitable for limited non-state investment.

However, Beijing will have to persuade entrenched interests at local, provincial and national governments to relinquish some control over state enterprises and attract investors to buy shares after one of the worst stock market crashes in China's history.

I live in Britain and we've had wall-to-wall media coverage of Corbyn for what seems like months now. The latest I heard this morning on BBC Radio 4's "Today" programme was that Corbyn would prefer to stay in Europe. I think it is too early to say just what his precise plans are; if he'll be more inclusive of the more middle-ground members of the Party or not. I think Armstrong is being a little sensationalist in the way he's presenting the story, to make his point. I agree that the money printing seems rather naive. Many people here are feeling financial pain and Corbyn seems to be offering hope for them, however realistic or unrealistic that might turn out to be.

TPTB_need_war I remember initially you had forecasted BTC sub-100$ bottom in October 2015 but then you delayed the deadline to Spring 2016. What was the rationale behind this change?

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The news-story of Labor Party leader Jeremy Corbyn getting elected as their leader seems quite under reported.  Corbyn is apparently a hard Marxist, and this will likely not be good for Britain. 

Armstrong gives his take here:

http://www.armstrongeconomics.com/archives/37148

Britain might be more likely to LEAVE the EU.

This will have other ripple effects in the EU and the USA (the Democrats carefully note Labor).

Corbyn wants to print money...:

http://quandly.com/jeremy-corbyns-socialist-agenda-could-push-britain-back-dark-ages

(link from Armstrong)

Armstrong has stated that predicting specific events and the short-term is much more noisy. Precisely for the reasons I have stated, which is that the chaos relevant to our needs is much more dominant in that case.

His model is incorporating the largest database every assembled on this subject matter. He invested over $1 billion in inflation adjusted dollars just compiling the database. His A.I. models have searched for hidden order in many dimensions. And thus the model is likely more sophisticated than you are contemplating.

It does do short-term prediction, but with time and price as orthogonal predictions, thus leaving a wide variability for outcomes. For example, back when oil was $100+ the model predicted that if time and price coincided, then the closing price for 2014 for oil could be $54, which was precisely the outcome.

So yes the big turns of major macro economic trends are much more predictable. For example, back in 2012 he predicted that the DJIA stock market would reach at least 18500 by 2015. It was unclear if the phase transition would be before 2015.75 or after, and it was dependent on whether the public confidence in US stock market would invert its public vs. private role and join private assets for their renewed bull market after 2015.75. He said he would know by end of 2014. So now it is clear that the DJIA has paused and the predicted run to 30,000 - 40,000 level will be delayed until 2017 (with the USA collapsing after 2017.9 on the ECM turn). And the explanation for the strong dollar and DJIA coming is because the rest of the world is $9 trillion short the dollar in dollar bond issues that were the carry trade from the QE. The Fed has no choice but to raise interest rates because otherwise pension funds will go bankrupt and besides as the speculators follow the trend into dollars, then they will exit bonds and into stocks because of the bull market. This will cause more short covering on the dollar and a self-feeding spiral will ensue. The Fed won't be setting interest rates, the markets will and the Fed will follow otherwise it loses credibility.

Let me thank you all for your insight and reasoning. IMHO, there's nothing you can "definitely" predict under any circumstances. In any case you would be subjected to that "tiny" turbulence within the chaotic spin of the series of events that will ruin your soup. I've been talking about this with a Jew friend over the net and he said to me "this is all BS - no one knows WTF will happen". He added though, that this kind of predictions have the "attractor" effect (ie: They tend to "create" the "circumstances" for it to happen).

In Physics terms it's just like triggering the double pendulum in order to pinpoint a certain trajectory within the next -short time- period (after a long while, it won't truly matter). I know the above may sound bogus, but they do have a great logical and scientific basis. Nevertheless, I cannot say for sure that that's the way things work...

PS:
Today's the day you know. The end of the 49 year cycle of Shemitah and the beginning of Jubilee year. Let's see what the cat will bring in...

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Before i sleep, some links:

https://www.google.com/search?q=site%3Aarmstrongeconomics.com+hidden+order

https://bitcointalksearch.org/topic/m.10890931

https://bitcointalksearch.org/topic/m.9566419



See also his entropy model for a stochastic momentum model.

The Lorenz Strange Attractor is a 3-dimensional dynamical system that exhibits chaotic flow, noted for its interesting shape revolving around two invisible strange points in space-time we call Strange Attractors. The map shows how the state of a dynamical system with three variables of a three-dimensional system evolves over the fourth dimension time in a complex, yet non-repeating pattern. In other words, here is a visualization of duality – what appears to be randomness (chaos) yet simultaneously there is a broader clear pattern of order. The same identical structure appears in light where it is both a wave form and particle, as we see in the economy where we retain our individuality yet at the same time we are part of a broader collective pattern. This is the very essence of the Invisible Hand – or in Lorenz terms, a Strange Attractor.

Therefore, Chaos theory is a field of study in mathematics, with applications in several disciplines including meteorology, physics, engineering, economics, biology, and philosophy. Chaos theory investigates the behavior of dynamical systems that are highly sensitive to initial conditions and subtle changes in the input can created drastic alternative in the outcome. This has been explained as the “effect” which is popularly referred to as the butterfly effect. Slight differences in initial conditions yield widely diverging outcomes for such dynamical systems, rendering long-term prediction impossible in general without comprehending dynamic analysis that is cyclical based.

This chaos that appears is complex, yet it masks a hidden order beneath. The complexity of variables creates the illusion that these systems are unpredictable yet they can be extremely deterministic when viewed correctly. The future behavior of such systems is entirely determined by their initial conditions, with no random elements involved whatsoever. In other words, the deterministic nature of these systems allows them to be predictable when approached objectively by a computer eliminating the randomness of human judgment. This type of behavior is best described as Deterministic Chaos.

Understanding that everything in nature moves in a cyclical manner is vital to comprehending the world around us. This is how energy moves. The waves in the ocean give the impression the water is moving when in fact if you throw a bottle that floats into the water you will notice that the bottle rises and falls but does not move with the waves that pass below. WHY? Because the wave is just energy moving THROUGH the water, not the water itself moving. Water movement is the current that takes place separate and distinct from the wave movement.

Once you wake up and begin to see that energy moves THROUGH the medium be it space, the air, or crowds of people causing collective behavior we call panic, then you can begin to see the world in a whole new light. This fall, we will see more chaos in weather.

I don't know if your understanding is flawed or not. I just wanted to say that I am not sure a hypothetical increase of rates would be that disastrous for the EM. There would be several forces in play, it's hard to say which one would dominate.

I'm not saying 10% would get into trouble, but in the event of a full blown crisis, the percentage numbers would be getting up there. The main point is that the amount of debt out there (corporate, EM, etc all predicated on zero rates) means only small amount of failures equals big trouble.

0.25% isn't much per se, but it would a) signal to the market the start of a rising cycle (reversing of carry trade) and b) increase the difference between EM currencies & USD (sell US bonds instead of buying, paid out in USD, convert to EM currency to support local $).. or is my understanding flawed?

Why would 10% of offshore borrowing be in trouble due to rates rising by 0.25 point?

Also, barring QE, the Fed only command the short term part of the interest curve. I guess the loans in USD are mainly long-term loans.

BIS fears emerging market chaos if Fed tightens.

http://www.telegraph.co.uk/finance/economics/11858952/BIS-fears-emerging-market-maelstrom-as-Fed-tightens.html

- offshore borrowing in USD: 9.6 trillion

- 3 trillion for emerging markets, a doubling since Lehman.


Imagine 10% of the offshore borrowings get into trouble. That's 960 billion, around Lehman x 1.5.