• 3 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 5 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 9 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 12 minutes China's Blueprint For Global Power
  • 4 hours Science: Only correct if it fits the popular narrative
  • 57 mins Crazy Stories From Round The World
  • 16 hours What are the odds of 4 U.S. politicians all having children working for Ukraine Gas Companies?
  • 21 hours EU has already lost the Trump vs. EU Trade War
  • 15 hours China's Renewables Boom Hits the Wall
  • 2 days ''Err ... but Trump ...?'' *sniff
  • 6 hours Do The World's Energy Policies Make Sense?
  • 16 hours Forget out-of-date 'dirty oil' smear, Alberta moving to be world's cleanest oil industry
  • 9 hours Impeachment Nonsense
  • 2 days Pioneer's Sheffield in Doghouse. Oil upset his bragging about Shale hurt prices. Now on campaign to lower expectations, prop up price.
  • 2 days Tesla Launches Faster Third Generation Supercharger
  • 21 hours Water, Trump, and Israel’s National Security
  • 2 days Passerby doused with flammable liquid and set on fire by peaceful protesters

Breaking News:

Russia Plans To Boost Crude Oil Exports

Alt Text

Goldman: Automated Trucks To Cost 300k Jobs Per Year

The race for automated trucking…

Alt Text

Did Venezuela Just Default?

S&P Global Ratings declared Venezuela…

Alt Text

Russia May Feel Pinch From Oil Cut Deal This Year

Russia’s central bank warned that…

Al Fin

Al Fin

Al Fin runs a number of very successful blogs that cover, energy, technology, news and politics.

More Info

Premium Content

China's Bubble of Rapid Economic Expansion Could Soon Burst

China's problems are piling up, just when the celestial kingdom is attempting an orderly handover of power. Since China's wild grab for commodities over the past 2 years has been a powerful driver of global energy markets, it will be interesting to watch global commodities markets as the China bubble begins to deflate. In economics, "cycles are forever." But China's insular government and its massive population are unfamiliar with economic concepts such as "what goes up, must come down." Watch and learn.

China's House of Cards

Chinese stocks are flashing warning signs. The Shanghai index has fallen 30pc since May. It is off 60pc from its peak in 2008, almost as much in real terms as Wall Street from 1929 to 1933.
"Investors are massively underestimating the risk of a hard-landing in China, and indeed other BRICS (Brazil, Russia, India, China)... a 'Bloody Ridiculous Investment Concept' in my view," said Albert Edwards at Societe Generale.

...China's $3.2 trillion foreign reserves have been falling for three months despite the trade surplus. Hot money is flowing out of the country. "One-way capital inflow or one-way bets on a yuan rise have become history. Our foreign reserves are basically falling every day," said Li Yang, a former central bank rate-setter.

...Fitch Ratings said China is hooked on credit, but deriving ever less punch from each dose. An extra dollar in loans increased GDP by $0.77 in 2007. It is $0.44 in 2011. "The reality is that China's economy today requires significantly more financing to achieve the same level of growth as in the past," said China analyst Charlene Chu.
Ms Chu warned that there had been a "massive build-up in leverage" and fears a "fundamental, structural erosion" in the banking system that differs from past downturns. "For the first time, a large number of Chinese banks are beginning to face cash pressures. The forthcoming wave of asset quality issues has the potential to become uglier than in previous episodes".

...A fire-sale is under way in coastal cities, with Shanghai developers slashing prices 25pc in November – much to the fury of earlier buyers, who expect refunds. This is spreading. Property sales have fallen 70pc in the inland city of Changsa. Prices have reportedly dropped 70pc in the "ghost city" of Ordos in Inner Mongolia. China Real Estate Index reports that prices dropped by just 0.3pc in the top 100 cities last month, but this looks like a lagging indicator. Meanwhile, the slowdown is creeping into core industries. Steel output has buckled. _Telegraph_via_Mish

If you cannot see a direct connection between the ongoing dynamic economic phenomena in Europe and China -- and the global energy markets -- perhaps you should look a bit more closely.

Emerging markets such as the BRICs have helped prop up energy markets through both artificial and natural economic means, over the past several years. But a lot of things could happen to reverse that trend, and make an artificial propping up of energy prices much more difficult.

By. Al Fin




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play