Saturday, November 26, 2011

Mauldin on China, Japan and India

"80% of Chinese construction firms
say developers are now behind on payments (late cash flow),
and that consequently land purchases
are already 42% down y/y (slowing local authority cash flow).

We also heard that pricing controls
means that utility companies no longer have the cash flow
to afford vital imports.

Q3 corporate cash flow was down 27%.

...“European...s are now starting to shrink their foreign loan books
to meet domestic needs, with Mexico, Brazil and China
all big losers.

With China ...unable to afford
to import vital coal and other resources
without either suffering domestic inflation
or without selling its FX reserves...

India may collapse first,
reducing the competition for coal
and giving China a little more breathing room.

...Japan is the next in line
to suffer a real world-shaking crisis.

...China, which does not adjust in advance,
can suffer contagion effects from Japan.

The world is so connected."


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