Fitch says China credit bubble unprecedented in modern world history

China’s shadow banking system is out of control and under mounting stress as borrowers struggle to roll over short-term debts, Fitch Ratings has warned.

The agency said the scale of credit was so extreme that the country would find it very hard to grow its way out of the excesses as in past episodes, implying tougher times ahead.

“The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially into a Japanese-style deflation,” said Charlene Chu, the agency’s senior director in Beijing.

“There is no transparency in the shadow banking system, and systemic risk is rising. We have no idea who the borrowers are, who the lenders are, and what the quality of assets is, and this undermines signalling,” she told The Daily Telegraph.

Angela Merkel’s advice for Europe’s unemployed: move

Germany’s chancellor Angela Merkel has a simple message for the millions young people in the eurozone who are out of work – move.

In an interview, Mrs Merkel said the high levels of youth unemployment in Europe represent a “huge crisis”, comparing the eurozone’s difficulties with post-Communist eastern Germany.

Speaking to the BBC, she said that when unemployment soared after the fall of the Berlin Wall, “many young people … only had jobs because they moved to the south.” Mrs Merkel said: “I think it’s unfair that it is the young people especially who have to pay the bill for something they didn’t do.

Portugal: ‘IMF: Order to kill’

The IMF report on Portugal’s implementation of an EU-brokered bailout plan aims to throw off the country’s constitutional court, says i.

Instead of including reforms in the 2014 state budget, the IMF wants to push directly into structural reforms, which assumes to be the most difficult part of the Portuguese adjustment program.

Greece Ousted from Index of ‘Developed’ Countries

Like other countries within the region that are yet to go into full-blown crisis, Greece failed from the beginning, and what’s more is that it was known. A second supporting link can be found here, from Spiegel Online.

The latest setback for Greece: booted the euro-zone member from its index of developed countries.

The decision, announced late Tuesday, is the first time the index provider demoted a country from its “developed” to its “emerging-market” category since the launch of its flagship emerging-markets index in 1987.

It affirms what investors have believed for years. Multiple bailouts by the European Union and the International Monetary Fund, a sharp contraction in gross domestic product and a still-large debt burden mean Greece now has more in common with Hungary than France.

Why You Will Be Blindsided By The Next Financial Crisis

“The global financial crisis that began in the United States in the summer of 2007 was triggered by a bank run, just like those of 1837, 1857, 1873, 1893, 1907 and 1933.”  That’s the theme of Yale economist Gary Gorton’s Misunderstanding Financial Crises, Why We Don’t See Them Coming, published last year by Oxford University Press. Students of financial crises will tell you that Gorton’s theme is highly relevant to the next meltdown we could face someday soon.

Under German Command

BERLIN/THE HAGUE/WARSAW (Own report) – The German Bundeswehr has announced the formation of a permanent military unit of foreigners under German command. Beginning in January 2014, approx. 2,100 soldiers from the Netherlands will be integrated into the “Rapid Reaction Force Division” as a result of a declaration of intent signed in Berlin last week by the defense ministers of both countries. Three dozen projects for closer cooperation between the two armed forces are planned. A second, similar declaration of intent, stipulating closer naval cooperation was also signed between the defense ministers of Germany and Poland. This cooperation includes combat missions. Specialists in military policy have been calling for intensifying military cooperation to increase the Bundeswehr’s military clout. Berlin would be well advised to seek cooperation particularly with the smaller countries, because they, it is said, unlike France or Great Britain, are more pliable allies due to their lesser power potentials.

18 Signs That Massive Economic Problems Are Erupting Everywhere

This is no time to be complacent.  Massive economic problems are erupting all over the globe, but most people seem to believe that everything is going to be just fine.  In fact, a whole bunch of recent polls and surveys show that the American people are starting to feel much better about how the U.S. economy is performing.  Unfortunately, the false prosperity that we are currently enjoying is not going to last much longer.  Just look at what is happening in Europe.  The eurozone is now in the midst of the longest recession that it has ever experienced.  Just look at what is happening over in Asia.  Economic growth in India is the lowest that it has been in a decade and the Japanese financial system is beginning to spin wildly out of control.

One of the only places on the entire planet where serious economic problems have not already erupted is in the United States, and that is only because we have “kicked the can down the road” by recklessly printing money and by borrowing money at an unprecedented rate.  Unfortunately, the “sugar high” produced by those foolish measures is starting to wear off.  We are going to experience a massive amount of economic pain along with the rest of the world – it is just a matter of time.

But for the moment, there are a lot of skeptics out there.

Bank of International Settlements Forges ‘Simple Plan’ to Avoid Bank Bailouts in Market Crash

The Bank for International Settlements has crafted a plan to inject major lenders with more cash, in the event of financial failure, while avoiding market chaos and the need to use taxpayers’ money.

According to BIS’ paper, the central bank forum laid out blueprints on how to recapitalise banks quickly and easily, while also allowing authorities to give an ironclad guarantee that insured depositors would not lose savings.

Merkollande takes the controls

German Chancellor Angela Merkel and French President François Hollande want to install a government for the Eurozone. This could change the EU’s structure, according to the press in both countries, but only if the leaders’ understanding is sustainable.

Angela Merkel and François Hollande have made up. The “Franco-German contribution,” announced on May 30, shows that the German Chancellor now supports the French President’s proposals concerning the governance of the Eurozone. French financial daily Les Echos notes that:

Germany and Poland Plan Naval Cooperation

A further intergrated European superstate, or the United States of Europe, is beginning to emerge. First came the economic and political coordination, and now comes a deeper intergration with the militaries joining forces. In the beginning with the military intergration trend, as has been tracked here, it began to shape up in France under the radar, and just recently with Dutch paratroopers combining forces as well as Poland’s naval cooperation just now. The Fourth Reich and European superstate with its upcoming European army is here, and under a different game plan via economic warfare and subjugation through giving up national soveignty rights in exchange for German-dominated “Troika” bailouts, but most still cannot connect the dots because they don’t see entire countries being wiped out as they did duing the first two world wars.

German Defense Minister Thomas de Maizière signed a memorandum of understanding with his Polish counterpart Thomasz Siemoniak for closer cooperation between the two countries’ navies, on May 27. The agreement paves the way for 28 joint projects, including joint monitoring of the Baltic Sea, combined training missions and perhaps cooperation in shipbuilding. A statement on the Polish Navy’s website said it was largest cooperation “by far” between the two navies.

“We have long become friends—today we are real partners in the Baltic Sea and beyond,” said de Maizière.

ECB Says Cyprus Bailout Triggered Mini-Bank Run

If the raid on Cypriot depositors and subsequent bank run could happen in Cyprus, it could happen in the rest of Europe, as demonstrated. If it can happen in Europe, it can also happen in America. In Cyprus’ case, it will take generations to recover.

The euro zone’s messy bailout of Cyprus caused a mini-run on banks in many of the currency union’s 17 members in April, exacerbating the decline in lending to the real economy, data from the European Central Bank showed Wednesday.

Is the Dollar Dying? Why US Currency Is in Danger

The U.S dollar is shrinking as a percentage of the world’s currency supply, raising concerns that the greenback is about to see its long run as the world’s premier denomination come to an end.

When compared to its peers, the dollar has drifted to a 15-year low, according to the International Monetary Fund, indicating that more countries are willing to use other currencies to do business.