Author: admin

The wave of financial distress flooding China’s corporate sector, which has seen a furious selloff in bonds following the unexpected default of several state-owned enterprises, is spilling over into a key financing conduit used by China’s giant shadow banking sector — the trust industry.

As Caixin reports, Huaxin Trust Co. one of 68 companies licensed to conduct trust business in China and one of the largest “shadow banks” in the mainland , is trying to raise as much as 6.8 billion yuan ($1 billion) from strategic investors as it faces a growing liquidity squeeze that’s already forced it to skip repayments on dozens of investment products over the past few months.

The Dalian, Liaoning province-based institution announced last Tuesday that it is seeking one or more strategic investors to inject 3.4 billion yuan to 6.8 billion yuan into the firm, which would increase its registered capital to 10 billion yuan to 13.4 billion yuan.

But, as Caixin’s Timmy Shen writes, what drew the market’s attention was a condition stipulated by Huaxin that any investor would need to agree to “support the company’s liquidity before the completion of their investment to allow the firm to protect the interests of investors in its trust products.” And while this is tantamount to a pledge to backstop a bailout of the core shadow banking pillar, one veteran trust-industry source told Caixin that it can be difficult to persuade strategic investors to provide liquidity support before even making their investment, although investors can use this as leverage to get better terms.

Even before the current episode of corporate bond turmoil triggered by the sudden defaults of state owned Yongcheng Coal and Brilliance Auto, China’s regulators had already become increasingly concerned about the hidden risks in the trust sector which plays an key role in the shadow banking sector by providing loans to higher-risk companies and those who have difficulty getting credit from traditional banks. The loans are packaged into high-yielding products which are then sold to retail investors and institutions.

For half a year, China’s Banking and Insurance Regulatory Commission (CBIRC) has been preparing regulations to put the country’s $3.1 trillion trust industry under closer oversight. The draft rules, which were put out for public comment in May, will govern how trust companies manage client funds, clarify requirements on trust products and toughen regulation of their loan-related investments.

Then in June, as part of a wave of wholesale systemic deleveraging which hammered such real-estate development firms as China Evergrande and nearly brought it to the edge of insolvency, the CBIRC told some trust firms to downsize their trust financing business according to tailored specifications provided by the regulator. The unofficial orders from the regulator followed a surge in demand for loans as companies scrambled for cash to help them weather the impact of the Covid-19 outbreak or to repay maturing loans. We detailed China’s regulatory push to limit debt in October in “China Crackdown On Property Developer Debt Sparks Fears About Systemic Crisis” when we laid out the new “Three red lines” policy espoused by Beijing limiting the amount of new debt issuance.

Enter Huaxin Trust, which has around 20 shareholders, and is controlled by a Beijing-registered privately owned company called Huaxin Huitong Group Co. Ltd. whose low-profile chairman, Dong Yongcheng, holds a 9.1% stake in the trust firm, according to corporate data provider Qichaha. Huaxin Trust’s second- and third-largest shareholders are both linked to Dong’s company. Huaxin Huitong held a 60% stake in Huaxin Trust in 2015, according to a Hong Kong stock exchange filing by Shengjing Bank Co. which is based in the northeastern province of Liaoning and which was negotiating to buy a 20% stake in the trust firm for 3.2 billion yuan. The deal subsequently fell through.

Fast forward to today, when Huaxin’s hunt for investors comes as it has struggled to pay out on maturing trust products amid growing stress on its corporate borrowers. As of Thursday, the trust firm had only repaid four products that matured recently, and extended repayment on 23 products, with the earliest coming due in September, according to its website. Huaxin Trust said in announcements  on its website that enterprises had failed to repay the principal and interest on the products forcing the company to extend the repayment dates as allowed in the terms and conditions of the trust products sold to investors.

In essence, the repackager of high-yielding debt was pushing off blame on what may soon be a cascade of falling dominoes on companies it had lent money to.

The company also said  that in addition to looking for strategic investors it is speeding up efforts to offload some of its underlying trust assets and its own assets, adding that any money raised through these liquidations would be used to repay investors in its trust products.

Meanwhile, there has been growing speculation that Huaxin Trust may have had funds embezzled by its largest shareholder, but the company put out a statement  on Nov. 10 denying that its largest shareholder had used or embezzled funds from the firm and saying that Huaxin Huitong “continued to give liquidity support to aid the company.”

At the end of last year, Huaxin Trust had about 61.6 billion yuan of trust assets under management, according to its 2019 annual report but that had fallen to about 49.2 billion yuan by the end of June, according to Tuesday’s strategic investment statement.

In short, Huaxin Trust is the latest trust firm and “shadow bank” to run into trouble in a sector already reeling from the effects of a crackdown on shadow banking and an economic slowdown exacerbated by the coronavirus pandemic.  Among them are Sichuan Trust Co. which has failed to repay investors more than 20 billion yuan, and Shanghai-listed Anxin Trust Co. once the darling of the trust sector, which collapsed last year and was found to have a “modest” 50 billion yuan black hole on its books.

The total assets in China’s shadow bank sector have shrunk consistently since peaking in early 2018 as Beijing focused on aggressively limiting the amount of high-yielding debt issued by the sector.

However, with tens of trillions in yuan-denominated debt still outstanding within this loosely regulated offshoot of China’s financial system, which still represents a last-ditch option for liquidity-challenged companies, as China’s economy continues to shrink from the consequences of the pandemic regardless of the rosy and goalseeked data that Beijing is publishing on a monthly basis to convince the world – and China’s massive depositor base – that all is well, we expect after the initial round of early tremors to hit China’s trust companies such as Huaxin, the real shock to China’s financial system is yet to come.

Authored by Monica Showalter via AmericanThinker.com,

Migrants, and more important, the people who traffic and profit from migrants, are like the stock market: They’re forward-looking. They make decisions now based on what they see coming down the pike.

So surprise, surprise, the media’s crowning of Joe Biden president, along with many world leaders congratulating him and conducting their affairs of state with him, even as legal challenges are going on, has sent a message to Central America’s gangs and Mexico’s cartels, who control migrant smuggling routes to the U.S. It’s time to profit. It’s time to go. A new border surge has begun, in anticipation of a Biden open-borders presidency, which comes just as Democrat-run states and Biden himself are prescribing new COVID lockdowns.

According to the Washington Times’s Stephen Dinan:

Border Patrol agents are already seeing a Biden surge in illegal immigration at the southwest border, officials said Thursday, with the numbers surging 21% over the last month alone.

Acting Customs and Border Protection Commissioner Mark Morgan said worsening economic conditions south of the border are largely responsible for the uptick, but he also blamed “perceived and or anticipated shifts in policies” here in the U.S.

He said it’s particularly dangerous at a time when the coronavirus pandemic is taking a toll on CBP personnel. At least 1,300 CBP staffers are currently quarantined, 700 are currently COVID-positive and 15 have died of the virus.

“I’ve attended way too many funerals,” Mr. Morgan said.

Border Patrol agents and CBP officers snared about 69,000 unauthorized border crossers in October, up from about 58,000 in September.

Based on the number of COVID cases the Border Patrol is suffering, the unvetted migrants are bringing it in.

Which pretty well negates the Biden/Democrat effort to enforce more lockdowns — the closed schools, the targeted bars, gyms and restaurants, the limited travel, the cancelled Thanksgiving, and more.

So long as there is no lockdown at the border, and COVID is rolling in from unvetted migrants with enough money to pay smuggling syndicates, any efforts to contain COVID from the stateside is nonsense. Too bad about all the boarded-up businesses.

It highlights the fundamental contradition of Biden’s love for lockdowns, and support for open borders. You can have one or the other, but you can’t have both. Biden’s policy of open borders stands in stark contradiction to his vow to contain COVID. Which one do you think he’s more serious about?

Issues & Insights had an excellent item the other day on just what he says he intends:

Instead of expelling illegals to protect U.S. neighbors and families, the Biden-Sanders priority is to make sure that “health coverage is available to everyone for testing, treatment, medical services, rehabilitation, and that vaccines are available free of charge, regardless of immigration or economic status.”

Beyond this, Biden has promised to dismantle Trump policies that had been working to restrain the flow of illegals – sorry, “undocumented people” – across the border.

Wall construction will stop. Biden promises to implement a 100-day freeze on deportations “while his administration issues guidance narrowing who can be arrested by immigration agents,” according to one news account.

He plans to reinstate catch-and-release, which created a massive loophole for illegals who are set free into the country while their asylum claim is adjudicated, never to return for their final hearing.

Up until now, President Trump has used Title 42 of the U.S. Code to expel illegal border crossers because of COVID.

That’s one of the very regulations that a President Biden can end instantly with the stroke of a pen, according to this Time magazine analysis:

Biden could also end Trump’s “expulsions” that have taken place since March 2020 as COVID-19 has spread across the U.S. and most of the world.

DHS’s expulsion rule allows U.S. Customs and Border Protection (CBP) to immediately remove anyone who crosses the border without authorization to their last country of transit without traditional processing or a chance to have their claims heard in court because of the risks posed by COVID-19. Since the rule was adopted in March, U.S. Border Patrol has conducted more than 197,000 expulsions, according to CBP data.

And yes, these places the illegal migrants are coming from are seeing big surges in COVID as well as the terrible economic effects of local lost tourism, lost trade, lockdowns, and shutdowns, as noted in this Focus Economics report here. The migrants looking for economic opportunity in the U.S. will find the same lockdowns here, but with generous welfare and free medical care. 

For Americans, there will just be more imported COVID.

Which, to get cynical, might just be what Democrats want — a permanent COVID that keeps the country locked down and themselves powerful, and millions and millions of COVID-filled migrants coming in to ensure that the lockdowns extend, ensuring that COVID is never contained.

You can bet Joe Biden won’t be addressing this fundamental contradiction of policy. He’s not serious about ending COVID. And in any case, he never answers questions. Not beyond what kind of ice cream he ordered. As long as migrants are surging the border, there will always be more waves of imported COVID.

President Trump’s campaign filed a notice of appeal after a federal judge dismissed a lawsuit aimed at blocking Pennsylvania from certifying the results of the election until tens of thousands of mail-in ballots are invalidated.

The late-Sunday filing with the US Court of Appeals for the Third Circuit in Philadelphia was an expected development, with Trump attorney Rudy Giuliani declaring in a Saturday statement: “We hope that the Third Circuit will be as gracious as Judge Brann in deciding our appeal one way or the other as expeditiously as possible,” adding “This is another case that appears to be moving quickly to the United States Supreme Court.”

US District Judge Matthew Brann, an Obama appointee, issued scathing commentary in his dismissal of the case – comparing the lawsuit to “Frankenstein’s monster” which had been “haphazardly stitched together” without evidence.

“In the United States of America, this cannot justify the disenfranchisement of a single voter, let alone all the voters of its sixth most populated state,” he continued.

Meanwhile, Harvard Law professor emeritus (and former Jeffrey Epstein associate), Alan Dershowitz, has outlined several legal paths to a 2020 victory for Trump.

As Jack Phillips of the Epoch Times writes (emphasis ours):

Dershowitz said there are a few “constitutional paths to victory” for the president’s legal team, but he stipulated that Trump will face legal hurdles in all of them.

“For example, in Pennsylvania, they have two very strong legal arguments. One, that the courts changed what the legislature did about counting ballots after the end of Election Day. That’s a winning issue in the Supreme Court. I don’t necessarily support it, but it’s a winning issue in the Supreme Court,” Dershowitz told Fox Business on Sunday. The team, meanwhile, has “a winning issue in the Supreme Court on equal protection, that some counties flawed ballots to be cured while others didn’t. Bush v. Gore suggests that an Equal Protection argument can prevail.”

Dershowitz, who helped defend Trump during the Senate impeachment trial earlier this year, said that due to Democratic candidate Joe Biden’s lead over the president, Trump’s team may not be able to contest enough ballots in Pennsylvania.

“The other legal theory they have, which is a potentially strong one, is that the computers, either fraudulently or by glitches, changed hundreds of thousands of votes. There, there are enough votes to make a difference, but I haven’t seen the evidence to support that,” he elaborated. “So, in one case, they don’t have the numbers. In another case, they don’t seem yet to have the evidence, maybe they do. I haven’t seen it. But the legal theory is there to support them if they have the numbers and they have the evidence.”

And he said that for Trump’s legal team, time is running out.

“You need to have witnesses, experts subject to cross-examination, and findings by a court,” he said, adding that there is no “legal route to undoing that” after the election is certified. “Their strongest case, if they have the evidence, is that computers may have turned hundreds of thousands of votes,” Dershowitz said.

Last week, Dershowitz noted that if Trump can “keep the Biden count below 270, then the matter goes to the House of Representatives, where, of course, there is a Republican majority among the delegations of states, and you vote by state if it goes to the House.

“You need a perfect storm for it to work,” he said. “You need to get enough states, enough state attorneys general, or state departments, or whoever, secretaries of state or governors that are Republican that legitimately refuse to certify the results because they’re under challenge on the day the Electoral College meets by statute.”

Rep. Mo Brooks (R-Ala.), a former prosecutor, told The Epoch Times last week that Congress has the “ultimate say over whether to accept or reject” Electoral College votes.

“Congress has the absolute right to reject the submitted Electoral College votes of any state, which we believe has such a shoddy election system that you can’t trust the election results that those states are submitting to us, that they’re suspect,” Brooks said. “And I’m not going to put my name in support of any state that employs an election system that I don’t have confidence in.”

Brooks noted that “on January 6th at 1 p.m. Eastern time, the 50 states will report to Congress, the president [of the] Senate will preside over this meeting” and “will report to Congress what they contend are their Electoral College results in their state.” The president of the Senate is Vice President Mike Pence under the U.S. Constitution.

By Eric Peters, CIO of One River Asset Management

“I am requesting that the Federal Reserve return the unused funds to the Treasury,” wrote Steve Mnuchin, in a letter addressed to Fed Chairman Powell, shutting the lights off on his way out.

“In the unlikely event that it becomes necessary in the future to reestablish any of these facilities, the Federal Reserve can request approval from the Secretary of the Treasury,” continued Mnuchin.

Days earlier, Chairman Powell had stated, “The Fed will be strongly committed to using all of our tools to support the economy for as long as it takes until the job is well and truly done. When the right time comes, and I don’t think that time is yet or very soon, we will put those tools away.”

So apparently, the time has come. In any other period, such a public disagreement between the Treasury Secretary and Fed Chairman would have sparked an abrupt 10% decline in the S&P 500, particularly when the Fed has so few tools at its disposal and fiscal policy is the only true lever capable of lifting the real economy.

But not now. Equity markets barely budged, the S&P 500 finishing the week -0.8%. Bond markets rallied, 10yr Treasury yields falling 7bps to 0.83%.

In fact, the only thing that really moved was Bitcoin and its brethren, which staged a stunning rally on the accelerating loss of faith in fiat along with a vague sense that something powerful, apolitical, transnational, is emerging in the cloud.

You see, the market seems to have so little confidence in our politicians that they no longer even trust them to engage in a proper fiscal fight. Instead, markets increasingly believe that no matter how dysfunctional our political parties, how damaged our democratic institutions, how deep our self-inflicted wounds, in the end, all paths lead to an increasingly abundant supply of debt and dollars.

And the market is not wrong.

Presented with no comment…

Science!

Authored by Matt Towery via RealClearPolitics.com,

In the classic movie “The Godfather,” Michael Corleone travels to a small restaurant in the Bronx to meet with a rival Mafia boss. At the table the boss tells a corrupt policeman who is there to serve as a third-party witness that he is going to “speak to Michael in Italian.” In the movie they switch languages to keep the policeman in the dark.

So I’m going to speak “Georgian,” not to keep anyone out, but to hopefully add context to two situations that the media has been conflating.

First the recount. Despite assertions by Secretary of State Brad Raffensperger and in the local media, the effort has been disingenuous. There was a failure to properly authenticate ballots. Finding thousands of uncounted ballots in the process doesn’t help create confidence in what Georgia officials claim to be a smooth process.

In addition, post-election data shows that some 15,000 individuals who no longer live in Georgia voted in the recent general election. Another 8,800 inactive voters mysteriously cast a vote in this cycle. Some 14,000 “low propensity” voters who basically have not voted in 10 years also participated. Almost all of those votes were cast before the November 3 same-day voting.

None of this suspicious activity could change the course of a recount in which not enough monitors were provided. And in many of the larger counties, monitors were forced to observe from a distance where they could not see the ballots. Signature verification was not even considered. But those lists of non-resident, inactive, and other so-called “miracle” voters could have their status challenged for the upcoming runoff, if done so quickly. That is not voter “suppression.” It’s enforcing the basic integrity of the election process.

A recent InsiderAdvantage poll showed that only half of Georgia voters believe the results of the November election were fair and accurate. Among Republicans, this figure was more than 70%. So that’s the landscape as we enter the runoff stage in an election that will determine control of the U.S. Senate.

Will the dog hunt?

Our survey found Democrat Raphael Warnock narrowly ahead of Republican Sen. Kelly Loeffler 49%-48%, with Republican Sen. David Perdue tied with Democrat Jon Ossoff at 49%-49%.

This suggests to me that both Republican incumbents are slight underdogs. I come to this conclusion not just as a pollster who usually gets Georgia right, but who served as a state representative, a GOP nominee for lieutenant governor, and as the political analyst for three of the four Atlanta network affiliates.

And this is where I start speaking “Georgian.” When I served in the legislature, our legendary House Speaker Tom Murphy used to say, as the legislative session was in its last days, that we were “down to the lick log,” (a farming term) meaning time was up. The Republican candidates in these Senate races are down to that “lick log.” Advanced in-person voting starts in less than a month and absentee ballots start being mailed this week.

And while Democratic activist and former state Rep. Stacey Abrams tweeted on Sunday that more than 600,000 voters already had requested mail ballots, Georgia Republicans are busy fighting with each other. They must find a way to appeal to two, very disparate, branches of their party. One dominates the suburbs – not just in Atlanta, but also outside Athens, Savannah, Columbus, and Sea Island. This is the establishment wing of the GOP. The other is the massive Donald Trump GOP that dominates rural towns and counties from the mountains of North Georgia to the Florida line. With the silence of the Republican Gov. Brian Kemp over the voting issues in Georgia, both rank-in-file Republicans and many state leaders are fighting each other. This is a house divided that must come together quickly — and may not.

Resentment toward Kemp among Trump supporters, who are still reeling from an election result they mistrust, could make turnout for Perdue and Loeffler problematic. Kemp has been asked to call a special legislative session to clean up Georgia’s chaotic absentee ballot laws but refuses to do so. In our latest InsiderAdvantage survey of Georgia, Kemp’s approval rating had plummeted to 37%, with Republicans divided over him.

The early campaign messages in the two races may further complicate matters.

Loeffler advocates have gone to the airwaves linking her opponent, the Rev. Warnock, to support of controversial positions and political figures. One of those ads has images of him dressed in more traditional African dashiki-style garments while preaching in a church. Perhaps that might persuade a few suburban white voters, but those images could also inflame Georgia’s very powerful African American demographic. Whether it is this particular ad, or something else, you can bet that Loeffler will be accused of racism. It’s a time-honored tradition in Georgia politics and trust me, it’s coming.

As a percentage of the vote, African Americans made up less of the general election turnout in November than in recent presidential contests. That should actually concern Republicans. Why? Because in the runoff Georgians could make history by electing a black pastor to the U.S. Senate from a state in the Deep South. I expect African American participation to increase: certainly, Democrats are trying to pump it up, as powerful figures such as Barack Obama have come to Georgia to point to this unique moment.

In Perdue’s instance, it appears that the well-worn “he’s too liberal” TV ad (which rarely resonates with voters in Georgia) has been substituted with a “he’s too radical” version. Perdue’s opponent, Jon Ossoff, has carefully cultivated image of a “progressive moderate.” Throwing the “R word” around might not do enough to damage the Democratic nominee. Just ask Craig Keshishian, the last living pollster for Ronald Reagan. Keshishian flatly declares, in a California version of our Georgia lingo, “That dog won’t hunt.”

And running Sen. Chuck Schumer in attack ads won’t work either because most Georgia voters have only a vague concept of who he is or what he does.

Republicans’ task

To recover their momentum, Republicans have to find a way to do three things:

First, the messaging to Atlanta suburban white voters must be specific as to how a victory for the Democratic nominees will impact them in a very personal way. That means ads showing solar panels being forced on their homes and social workers substituting for police. Calculating the cost of their soon-to-be new tax increases in their city or county, courtesy of lost revenues due to COVID, might make these voters think twice about casting a vote that is likely to add to their federal tax burden. Unless they see tangible challenges to their lifestyle or pocketbooks, suburban voters will likely continue their drift to a party they view as moderate — or perhaps even liberal — but not socialist.

Secondly, the Trump base must be reengaged. Make no mistake, a huge portion of these voters couldn’t care less about the two U.S. senators. Their devotion is to Donald J. Trump, and only Trump can deliver them back to the polls. In Georgia, Trump is not a political figure among most Republicans; he’s closer to a religion.

Finally, let’s return to that discussion of the recount. How about those many voters who have moved out of Georgia or who have not voted in ages but somehow managed to send an absentee ballot this go-around? These votes, however they were obtained, represent the slim margin which make the two Republicans sight underdogs in my book. There is a short window in which, under Georgia law, their status can be challenged by appealing to their local county election board.

For the two Republican incumbents, and for the balance of power in the Senate, we are truly at “the lick log.”

Glenn Greenwald is starting his post-Intercept life as a freelance journalist with a bang…

Last week, he threw haymakers at corporate media – calling out NBC and CNN for hiring “little hall monitor dweebs whose only purpose is to pressure other platforms to censor or block the voices that are most threatening to them” (which is exactly what happened to Zero Hedge and The Federalist).

CNN and NBC and others now employ little hall monitor dweebs whose only purpose is to pressure other platforms to censor or block the voices that are most threatening to them. It’s not journalism: it’s quashing of dissent. That’s their function: it’s vital to see that clearly. pic.twitter.com/vOMhohPUpi

— Glenn Greenwald (@ggreenwald) November 16, 2020

One of said “dweebs,” NBC‘s Ben Collins, engaged, replying: “Good to hear from you. I’ve got a few questions,” to which Greenwald said: “NBC News is a huge corporate conglomerate that has always existed to disseminate US Govt, CIA and corporate propaganda … Does your employment there ever make you think that your self-conception as a brave, intrepid journalist confronting corrupt power centers might be a fraud?“

NBC News is a huge corporate conglomerate that has always existed to disseminate US Govt, CIA and corporate propaganda.

Does your employment there ever make you think that your self-conception as a brave, intrepid journalist confronting corrupt power centers might be a fraud?

— Glenn Greenwald (@ggreenwald) November 17, 2020

Calling out the MSM’s links to the CIA sent MSM journalist Sulome Anderson over the edge. Anderson, whose AP journalist father was was held hostage by Hezbollah for six years in the 80s, tweeted: “This crosses a line. Like some of his protégés, Glenn is endangering journalists working in perilous environments by telling his massive following that they are mouthpieces for U.S. intelligence. NBC reporters work in places where any affiliation with the CIA is life-threatening.“

Greenwald hit back, calling her comment “manipulative bullshit” and pointing out that NBC hired former CIA director John Brennan, along with “Ken Dilanian & every other operative puked up by the security state.”

LOL. The notion that you can’t point out NBC’s long-standing role in spouting CIA propaganda without “endangering” their employees is manipulative bullshit.

They hired *John Brennan*, Ken Dilanian & every other operative puked up by the security state. People already know. https://t.co/V2i5Ev0agc

— Glenn Greenwald (@ggreenwald) November 21, 2020

He then proceeded to excoriate the press as he furthered his point:

The CIA lies of the Iraq War were principally sold on Meet the Press. Ground Zero for mindless CIA stenography of the most unhinged Russiagate conspiracies was MSNBC.

If you don’t want to be known as a CIA outpost, then …. don’t be one.

— Glenn Greenwald (@ggreenwald) November 21, 2020

Profoundly sorry for endangering the lives of NBC executives and TV personalities by spilling the extremely well-kept secret of their close working relationship with the CIA. pic.twitter.com/AfA2YROg79

— Glenn Greenwald (@ggreenwald) November 21, 2020

Others were quick to point out that Glenn had the high ground on this one, to which Anderson essentially conceded he was correct.

She ends up admitting it in the same thread. Tres bizarre pic.twitter.com/AhmmkfLKVn

— Chad Vigorous (@PrettyBadLefty) November 21, 2020

https://t.co/My1bxkB55D

what are you talking about

— Ambitionz Az Derrida (@a_bad_sign) November 17, 2020