ASIABIZBLOG

Growth in electric power generation "has collapsed under the weight of the global economic implosion — at least for now," claims Andrew Revkin, author of the New York Times Dot Earth blog,. Environmental activists appear to consider this progress in the climate control wars -- the necessity for which I question. Global warning is a theorem whose proof I find circumstantial and unpersuasive. [But then, I'm generally skeptical and don't usually rush to judgment. Let's give it another generation or two...]

Certainly, the graph the weblog displays, based upon China's notoriously unreliable National Bureau of Statistics, claims a decrease in growth. Here, here and here (from 2002), just for starters. To what extent have these energy stats been studied, picked apart, cross-tested?

In 2001, Tom Rawski, economist at the University of Pittsburgh, in "What's Happening to China's GDP Statistics," argued persuasively that the unreliability of Chinese energy statistics has caused serious flaws in official GDP calculations. Has something happened between 2001 and 2008 in China that have made these statistics more trustworthy? [That was a rhetorical question.]

Yes, yes, I know. It seems believable: a widespread decrease in manufacturing will most likely cause a drop in energy generation. But where are the hard numbers? Why are Stanford academics parroting official Chinese numbers? Where is the analysis?

For a brief summation on Electricity Regulation in China, read this short paper, authored by Lehman, Lee and Xu, which Aldo de Nobili and Ed Lehman were kind enough to send me. Download file

One in five of an estimated 700,000 South Koreans living in China at the start of 2007 have left [China], according to the [South Korean] consulate in Beijing.

A brief article on its causes, worth reading.

Sorry, China Hands, but this is too fascinating -- must share it with all those following the Madoff Meltdown.

Harry Markopolos's 2005 letter to the SEC. Lengthy, detailed, intelligent, outrageous.

An enjoyable article by Alan Wheatley: China and the "Garbo Defense." Indeed, what economic policy toward China will the Obama administration adopt? Any at all?

"In bad times everybody talks more about financial cooperation, but the reality is that in bad times everyone wants to take care of himself first," said Shi Yinhong, an international security professor at Renmin University in Beijing.

"There is a great deal of interdependence, but built into that interdependence there are many potential conflicts," he said.

Federal Reserve Board Vice-Chairman Donald Kohn before Congress on the importance of keeping secret the names of the recipients of the American banking bail-out.

Gasp. I don't think I can muster up even a single comment on this one.

Paulson's Legacy: Geithner:

Timothy F. Geithner, who moved closer to confirmation as Treasury secretary on Thursday, told senators that President Obama believed China was “manipulating” its currency,

Again? Since 2006, we've discussed Treasury's desire to move the RMB, but, by now, it's become a dreadful bore. [Search this page or click the Foreign Exchange category of this blog.]

Perhaps Washington believes that China has been weakened and leverage may be exerted where popular opinion supports the administration. Watch out for the push-back!

UPDATE (8 hours later):

Sure enough, the Chinese have fired back.

A Chinese ministry Saturday strongly denied Obama administration claims that China "manipulates" its currency, as the first contact between the new administration and China takes a markedly sour tone.

Due diligence on potential clients purporting to hail from foreign lands means more than simply calling the bank and asking if their "Official Bank Check" is good. This article follows the latest court filing, Buckley, White, Castaneda & Howell v. Citibank, in which an eager attorney is now on the hook for $182,500. Petition / Answer

[See our posts on the attorney email scam in our Legal category.]

Not only are Korean expats leaving China, as we posted earlier this month, but migrant Indian workers are no longer willing to call Dubai home:

It's the great escape by Indians who've hit the dead-end in Dubai. Local police have found at least 3,000 automobiles -- sedans, SUVs, regulars -- abandoned outside Dubai International Airport in the last four months. Police say most of the vehicles had keys in the ignition, a clear sign they were left behind by owners in a hurry to take flight.

[Many thanks to Miss Johnson From London for the onpass.]

American lawmakers appear to have shelved the frightful idea of "nationalizing" failing banks. However, they've now settled down to discuss -- from media commentary, frantically -- a plan that mimics the experience of modern Chinese banking regulators: the creation of a "bad bank" to remove toxic assets from the system.

You may remember that the Chinese banking system was (and remains) functionally bankrupt. [This article from 2005 is worthwhile reading.] Through deft financial sleight-of-hand, a satisfactory percentage of non-performing loans (NPLs) were removed to a state-controlled holding companies (AMCs), thus allowing, among other benefits, quasi-state-owned financial institutions to list on foreign stock exchanges, sporting "acceptable" NPL ratios. But NPLs continue to rise, despite Chinese statistics (read "notorious.") to the contrary. (Whom to believe?)

PWC Hong Kong's China NPL Investor Survey 2006 -- evidently the last issued, for good reason (remember that Ernst & Young retracted its NPL report of 2006 under pressure from Chinese regulators) -- states:

The size of the China NPL market is extensive. Based on the statistics provided by the China Banking Regulatory Commission ("CBRC") as at the end of the 3rd quarter of 2006, the total number of NPLs in China's commercial banks was approximately RMB1.3 trillion (US$160 billion). However, this amount does not include the NPLs that are presently held by the AMCs -- the only NPLs from China's banking system that to our knowledge are available for sale to investors.

It is difficult to estimate the amount of unresolved NPLs within the AMCs as they generally only report the amount disposed from their initial 1999 transfer loans of RMB1,400 billion (US$170 billion), and not amounts disposed from the various subsequent transfers made in 2004/05 which, based on press reports, we estimate total approximately RMB1,225 billion (US$153 billion). Recent press reports indicate that as of the second quarter of 2006, the AMCs have resolved approximately RMB1,169 billion (US$145 billion and paren of the 1999 transfer loans. That leaves a balance of RMB231 billion (US$30 billion) of the 1999 transfer loans that still need to be resolved and an unknown number of the RMB1,225 billion (US$153 billion) subsequent transfer loans requiring disposal. Whatever way you look at it, the AMCs still have a large number of NPLs on their books that they need to resolve.

It shouldn't surprise that foreign investors are no longer in the market for NPLs:

The China NPL market for foreign investors is very quiet and we expect it to remain so for some time. While there is supply and demand, only a handful of transactions have been completed this year and foreign NPL investors are leaving the market in droves. In addition, we have not noticed any new entrants to the market.

Now, with the U.S. very likely to purchase its own children's toxic assets, perhaps it will turn to China for expertise? With similar "success?"

And who will buy these assets, if they can be called that, from the proposed "bad bank?" And for what prices: who will determine them and by what method? Mark to market? What market? what astronomical sum would it, in fact, cost? No one, it seems, really knows...

The Bad Bank (see yesterday's post) has hit a snag and may not progress past the light bulb stage. Executive regulators don't seem to know how it would work in practice.

Federal Deposit Insurance Corp Chairman Sheila Bair is apparently pushing for the top post of Baddest Banker:

FDIC Chairman Sheila Bair is pushing to run the operation, which would buy the toxic assets clogging banks’ balance sheets, one of the people said. Bair is arguing that her agency has expertise and could help finance the effort by issuing bonds guaranteed by the FDIC, a second person said.

Surely this sounds like Iraq all over again: a massive invasion frantically cobbled together with little planning as to the "after party."