Category: zerohedge

Regular readers know that at the end of every month we look at the next month’s POMO schedule, and urgently advise against shorting stocks on POMO days. That in the New Normal POMO days are pretty much every single day, may have something to do with why the S&P is set for a +30% close in 2013. However, in December the Fed has something very special served up. In addition to the usual $45 billion in total monthly wealth effect injections (which happen to quietly end up directly in Singapore private wealth offshore accounts), in the next month, Ben Bernanke’s parting gift to the 0.1% will be not one… not two… but a whopping three days with double POMOs: December 3, December 9 and, drumroll, December 19, aka the day after the final 2-day FOMC meeting of 2013, when Kevin Henry and his peers will monetize up to a whopping $7.5 billion in one day!

Is it a harbinger that something bad may take place the day before? We doubt it: this is merely the Fed doing everything it can in its power to make sure Santa Claus appears right on schedule for the billionaires of the world just so their spending habits are not impaired.

We, however, are positive that anyone caught shorting stocks on pretty much any day in December, but especially those three, will certainly not feel the benefits of whatever wealth the middle class has left being funneled into the bank accounts of the uberwealthy, as Ben Bernanke’s reverse Robin Hood ramps on, alongside the Russell 2000.

Joking aside, something notable is that while the Fed is not monetizing anything between Christmas and New Year’s Day in 2013, it had no problems with injecting liquidity in the quiet week of 2012. One wonders what changed.

Source: Central Planning Politburo of New York

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Ev5Eq0b3sFA/story01.htm Tyler Durden

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

"Governments cannot reduce their debt or deficits and central banks cannot taper. Equally, they cannot perpetually borrow exponentially more. This one last bubble cannot end (but it must)."

I often refer to debt serfdom, the servitude debt enforces on borrowers. The mechanism of this servitude is interest, and today I turn to two knowledgeable correspondents for explanations of the consequences of interest.

Correspondent D.L.J. explains how debt/interest is the underlying engine of rising income/wealth disparity:

Here is a table of the growth rate of the GDP.

If we use $16T as the approximate GDP and a growth rate of, say, 3.5%, the total of goods and services would increase one year to the next by about $500B.

Meanwhile, referencing the Grandfather national debt chart with the USDebtClock data, the annual interest bill is $3 trillion ($2.7 trillion year-to-date).

In other words, those receiving interest are getting 5-6 times more than the increase in gross economic activity.

Using your oft-referenced Pareto Principle, about 80% of the population are net payers of interest while the other 20% are net receivers of interest.

Also, keep in mind that one does not have to have an outstanding loan to be a net payer of interest. As I attempted to earlier convey, whenever one buys a product that any part of its production was involving the cost of interest, the final product price included that interest cost. The purchase of that product had the interest cost paid by the purchaser.

Again using the Pareto concept, of the 20% who receive net interest, it can be further divided 80/20 to imply that 4% receive most (64%?) of the interest. This very fact can explain why/how the system (as it stands) produces a widening between the haves and the so-called 'have nots'.

Longtime correspondent Harun I. explains that the serfdom imposed by debt and interest is not merely financial servitude–it is political serfdom as well:

As both of us have stated, you can create all of the money you want, however, production of real things cannot be accomplished with a keystroke.

Then there is the issue of liberty. Each Federal Reserve Note is a liability of the Fed and gives the bearer the right but not the obligation to purchase — whatever the Fed deems appropriate. How much one can purchase keeps changing base on a theory-driven experiment that has never worked. Since the Fed is nothing more than an agent of the Central State, the ability to control what the wages of its workers will purchase, is a dangerous power for any government.

If a Federal Reserve Note is a liability of the central bank, then what is the asset? The only possible answer is the nations productivity. So, in essence, an agent of the government, the central bank, most of which are privately owned (ownership is cloaked in secrecy) owns the entire productive output of free and democratic nation-states.

People who speak of liberty and democracy in such a system only delude themselves.

Then there is the solution, default. That only resolves the books, the liability of human needs remain. Bankruptcy does not resolve the residue of social misery and suffering left behind for the masses who became dependent on lofty promises (debt). These promises (debts) were based on theories that have reappeared throughout human history under different guises but have never worked.

More debt will not resolve debt. The individual’s liberty is nonexistent if he does not own his labor. A people should consider carefully the viability (arithmetical consequences) of borrowing, at interest, to consume their own production. The asset of our labor cannot simultaneously be a liability we owe to ourselves at interest.

Thank you, D.L.J. and Harun. What is the alternative to the present system of debt serfdom and rising inequality? Eliminate the Federal Reserve system and revert to the national currency (the dollar) being issued by the U.S. Treasury in sufficient quantity to facilitate the production and distribution of goods and services.

Is this possible? Not in our Financialized, Neofeudal-Neocolonial Rentier Economy; but as Harun noted in another email, Governments cannot reduce their debt or deficits and central banks cannot taper. Equally, they cannot perpetually borrow exponentially more. This one last bubble cannot end (but it must).

What we are discussing is what will replace the current system after it self-destructs.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/d8v1L2HaMlk/story01.htm Tyler Durden

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

"Governments cannot reduce their debt or deficits and central banks cannot taper. Equally, they cannot perpetually borrow exponentially more. This one last bubble cannot end (but it must)."

I often refer to debt serfdom, the servitude debt enforces on borrowers. The mechanism of this servitude is interest, and today I turn to two knowledgeable correspondents for explanations of the consequences of interest.

Correspondent D.L.J. explains how debt/interest is the underlying engine of rising income/wealth disparity:

Here is a table of the growth rate of the GDP.

If we use $16T as the approximate GDP and a growth rate of, say, 3.5%, the total of goods and services would increase one year to the next by about $500B.

Meanwhile, referencing the Grandfather national debt chart with the USDebtClock data, the annual interest bill is $3 trillion ($2.7 trillion year-to-date).

In other words, those receiving interest are getting 5-6 times more than the increase in gross economic activity.

Using your oft-referenced Pareto Principle, about 80% of the population are net payers of interest while the other 20% are net receivers of interest.

Also, keep in mind that one does not have to have an outstanding loan to be a net payer of interest. As I attempted to earlier convey, whenever one buys a product that any part of its production was involving the cost of interest, the final product price included that interest cost. The purchase of that product had the interest cost paid by the purchaser.

Again using the Pareto concept, of the 20% who receive net interest, it can be further divided 80/20 to imply that 4% receive most (64%?) of the interest. This very fact can explain why/how the system (as it stands) produces a widening between the haves and the so-called 'have nots'.

Longtime correspondent Harun I. explains that the serfdom imposed by debt and interest is not merely financial servitude–it is political serfdom as well:

As both of us have stated, you can create all of the money you want, however, production of real things cannot be accomplished with a keystroke.

Then there is the issue of liberty. Each Federal Reserve Note is a liability of the Fed and gives the bearer the right but not the obligation to purchase — whatever the Fed deems appropriate. How much one can purchase keeps changing base on a theory-driven experiment that has never worked. Since the Fed is nothing more than an agent of the Central State, the ability to control what the wages of its workers will purchase, is a dangerous power for any government.

If a Federal Reserve Note is a liability of the central bank, then what is the asset? The only possible answer is the nations productivity. So, in essence, an agent of the government, the central bank, most of which are privately owned (ownership is cloaked in secrecy) owns the entire productive output of free and democratic nation-states.

People who speak of liberty and democracy in such a system only delude themselves.

Then there is the solution, default. That only resolves the books, the liability of human needs remain. Bankruptcy does not resolve the residue of social misery and suffering left behind for the masses who became dependent on lofty promises (debt). These promises (debts) were based on theories that have reappeared throughout human history under different guises but have never worked.

More debt will not resolve debt. The individual’s liberty is nonexistent if he does not own his labor. A people should consider carefully the viability (arithmetical consequences) of borrowing, at interest, to consume their own production. The asset of our labor cannot simultaneously be a liability we owe to ourselves at interest.

Thank you, D.L.J. and Harun. What is the alternative to the present system of debt serfdom and rising inequality? Eliminate the Federal Reserve system and revert to the national currency (the dollar) being issued by the U.S. Treasury in sufficient quantity to facilitate the production and distribution of goods and services.

Is this possible? Not in our Financialized, Neofeudal-Neocolonial Rentier Economy; but as Harun noted in another email, Governments cannot reduce their debt or deficits and central banks cannot taper. Equally, they cannot perpetually borrow exponentially more. This one last bubble cannot end (but it must).

What we are discussing is what will replace the current system after it self-destructs.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/d8v1L2HaMlk/story01.htm Tyler Durden

Greater-est fools? Or different this time?

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/jIA100nIVEI/story01.htm Tyler Durden

Ed Snowden's latest revelation may leave SEC officials quaking as the NSA "has been gathering records of online sexual activity and evidence of visits to pornographic websites as part of a proposed plan to harm the reputations of those whom the agency believes are radicalizing others through incendiary speeches." Of course, as we have seen, this 'information' would never be used by the government for non-radical-terrorist suppressing reasons, as the ACLU notes, is is "an unwelcome reminder of what it means to give an intelligence agency unfettered access to individuals' most sensitive information using tactics associated with the secret police services of authoritarian governments."

 

Via Snowden…

The National Security Agency has been gathering records of online sexual activity and evidence of visits to pornographic websites as part of a proposed plan to harm the reputations of those whom the agency believes are radicalizing others through incendiary speeches, according to a top-secret NSA document.

 

The document, provided by NSA whistleblower Edward Snowden, identifies six targets, all Muslims, as “exemplars” of how “personal vulnerabilities” can be learned through electronic surveillance, and then exploited to undermine a target’s credibility, reputation and authority.

 

The NSA document, dated Oct. 3, 2012, repeatedly refers to the power of charges of hypocrisy to undermine such a messenger.”

Full ACLU Statement:

The NSA considered discrediting six people by revealing surveillance evidence of their online sexual activity, visits to pornography websites, and other personal information, according to a report today in The Huffington Post. The article cited documents leaked by former NSA contactor Edward Snowden. The targets of the NSA’s plan were all Muslims whom the NSA characterized as “radicals” but who were not believed to be involved in terrorism. The documents say one of the targets was a “U.S. person,” a term describing American citizens and legal permanent residents, but all of the targets were reportedly outside the United States.

 

American Civil Liberties Union Deputy Legal Director Jameel Jaffer had this reaction:

 

“This report is an unwelcome reminder of what it means to give an intelligence agency unfettered access to individuals' most sensitive information. One ordinarily associates these kinds of tactics with the secret police services of authoritarian governments. That these tactics have been adopted by the world’s leading democracy – and the world’s most powerful intelligence agency – is truly chilling.”

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/coujRQSBm4E/story01.htm Tyler Durden

In early 2013, many were mystified when one of the most vocal deflationists, and hence stock market bears, David Rosenberg, turned furiously bullish. Just what was the motive behind this transformation many wondered? Thanks to a just filed Gluskin Sheff compensation table, we can put all such lingering questions to rest: the reason, or rather reasons: 3,082,441… all-cash.

Some more on why the formerly rather bearish ex-Merrill strategist will make the most in 2013, or $3.1 million, almost as much as the CEO of his employer, and has the highest, $1.8 million, annual incentive plan of any Gluskin Sheff:

Mr. Rosenberg’s employment agreement provides a mechanism by which Mr. Rosenberg shares in any net revenues generated from Gluskin Sheff’s efforts to monetize economic research authored by Mr. Rosenberg and published by Gluskin Sheff. Mr. Rosenberg’s employment agreement further provides that he will receive guaranteed additional compensation of $1,800,000 per annum in addition to his base salary until June 30, 2014…. In the case of Mr. Rosenberg, his employment agreement stipulates that he will receive guaranteed additional compensation of $1,800,000 per annum until June 30, 2014, in addition to his base salary. For the 2013 fiscal year, $0.5 million of the guaranteed additional compensation paid to Mr. Rosenberg was allocated from the Bonus Pool, and for fiscal 2012 the guaranteed additional compensation was not allocated from the bonus pool.

And the full explanation, from Globe and Mail

It’s hard to imagine a a top-five executive with a public company in Canada with a sweeter deal than David Rosenberg, as evidenced by his employer Gluskin + Sheff Associates Inc.’s newly filed management information circular.

 

Mr. Rosenberg, the all-star chief economist and strategist with the money management firm earned an impressive $3.1-million in the company’s most recent fiscal year, ended June 30, making the former chief North American economist at Bank of America-Merrill Lynch the company’s second-highest paid executive behind CEO Jeremy Freedman.

 

What is unusual about his compensation is how little of it is tied to the success of his employer, either in its financial performance or stock price. Actually, none of it is. As long as Gluskin has enough money to keep on the lights, stay in business and pay employees, Mr. Rosenberg is guaranteed a payment of $2-million a year. That’s split into two parts: his $200,000 salary, and a $1.8-million amount identified in the proxy circular as “guaranteed annual compensation.” The guaranteed payment agreement has been in place for the last two fiscal years and continues through the end of this fiscal year next June. It is paid in cash, not share units.

 

The third element of his compensation is variable, but it has nothing to do with the performance of his firm or the accuracy of his forecasting, but rather the popularity of his research, which reaches far beyond Canada: Mr. Rosenberg pocketed $1.08-million in gross pay last year from his share of net revenues generated by the company’s sale of economic research he pens. That’s up from $877,645 the year before, making Mr. Rosenberg one of the few Canadian authors to earn a $1-million a year for his work.

 

Not a bad haul when you consider Mr. Rosenberg made a much publicized shift in his thinking earlier this year, shedding part of his bearish stance to adopt a more bullish view on Canada.

Source: Gluskin Sheff circular

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/THDK2Ug7GpU/story01.htm Tyler Durden

In a move reminiscent of the “radical” Tea-Party demands of a few weeks back, the administration has decided:

• *OBAMA DELAYING ONLINE INSURANCE ENROLLMENT FOR SMALL BUSINESS
• *SMALL BUSINESSES SAID TO USE `DIRECT ENROLLMENT,’ NOT WEBSITE

The one-year delay – to Nov 2014, follows the initial Oct 2013 delay citing “sometime in November 2013” availability. The delay applies only to the federal-run SHOP exchanges in almost three dozen states.

 

Via HHS,

“We’ve concluded that we can best serve small employers by continuing this offline process while we concentrate on both creating a smoothly functioning online experience in the SHOP Marketplace, and adding key new features, including an employee choice option and premium aggregation services, by November 2014,”

Via Bloomberg,

Small businesses won’t be able to use the federal government’s health-insurance website until November 2014 in most U.S. states, the latest delay for the Obama administration’s health-care system overhaul.

 

“Direct enrollment” will be available in the meantime, said an official with the U.S. Department of Health and Human Services who asked not to be identified because the decision hasn’t been made public. The change applies to 36 states where the federal government is running insurance exchanges.

 

The exchanges for small businesses, available for companies with 50 or fewer full-time workers, had already been delayed from a scheduled Oct. 1, 2013, start.

So far so good eh?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Bil4Oof6i0I/story01.htm Tyler Durden

.

The Kleptos are now giving thanks

For money that flows to their banks

Their hunger for more

Is killing the poor

As the global economy tanks

The Limerick King

 

.

 

 

 

 

 

.

 

 

 

 

.

 

 

 

 

.

 

 

.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/NE6d5ezrONs/story01.htm williambanzai7

While one can make an argument that the central banks have now destroyed all traditional “cycles”, including the economic “virtuous cycle“, the business cycle and even the leverage cycle, the question remains how much longer can the Fed et al defy mean reversion and all laws of nature associated with it. That said, assuming the fake market environment we find ourselves in persists for at least another year, this is what the leverage cycle would look like assuming $10 trillion in global central bank assets were a pro forma new normal.

Keep a close eye on China: it is on the cusp between the end of the leverage cycle (where as we reported over the past two days, it has been pumping bank assets at the ridiculous pace of $3.5 trillion per year) and on the verge of having its debt bubble bursting. What happens then is unclear.

Some thoughts on the above graphic from SocGen:

For the first time post-crisis, we expect advanced economies in 2014 to see a marked increase in their contribution to global growth. Emerging economies have over the past few years offered a welcome support to global growth, but this relied in part on a build-up of credit that now needs to be paid down. The hope is for advanced economies to take over the baton from the emerging economies as the main driver of global growth. The US is now poised for sustainable  recovery and in Japan hopes remain that Abenomics will work. The euro area, however, continues to lag. As such the growth relay from emerging to advanced is likely to prove a bumpy process. Commodity markets will sit at the heart of this dynamic – our strategists look for range-bound markets in 2014.

This new rotation of the global leverage cycle is an integral part of our monetary policy outlook, which we discuss in greater detail in the following sections. Several features are worth noting:

Time for emerging economies to deleverage: Post crisis, emerging economies adopted accommodative economic policies to offset the collapse in demand for their output. Providing a further boost, accommodative monetary policies in advanced economies drove significant financial flows into the region. Combined, these fuelled credit expansion. With the turn in the US interest rate cycle back in the spring, external financing conditions tightened. Moreover, in a number of emerging economies, policymakers have become increasingly concerned by a build-up in leverage; this is not just a story of level, but also one of speed. As seen from our leverage cycle, we believe the emerging economies have now moved to a phase of deleveraging. Our emerging market theme, however, is not just one of a cyclical downturn. As we have highlighted on several occasions, we believe potential growth is structurally slowing and no more so than in China.

China must tame excess capacity: With NFC debt at over 150% of GDP and significant excess capacity, China is ripe for deleveraging. Already in 2013, a notable feature of our forecast has been that the Chinese authorities would resist market pressure to ease monetary policy and further fuel the credit bubble. Nonetheless, shadow bank credit has continued to expand and, with that, problems of excess capacity. China’s challenge now is to deleverage and reform. The two in many ways go hand in hand and we discuss these issues in Boxes 5 and 14. It is worth nothing here that reform in China is tantamount to removing  the 100% implicit state guarantee. And looking ahead, even state-backed companies could be allowed to fail. Herein resides also a potential trigger for the risk scenario of a hard landing, should such a company failure be poorly managed and spin out of control.

Japan’s corporate sector to cut savings to invest: Investment and savings are two sides of the same coin and to secure sustainable recovery in Japan, corporations need to reduce savings and invest. The BoJ’s monetary policy is already working through the currency channel and our expectation is to see a pick-up in corporate investment next. This is not just a function of monetary policy, but also the two remaining arrows of Abenomics, namely fiscal stimulus and structural reform. We see significant opportunities medium-term from reform as discussed in Box 13. Short-term, the BoJ is poised to deliver further  stimulus and we look for additional asset purchases to be announced early in the new fiscal year (commencing April 1).

US credit cycle is turning: Credit channels have been repaired, household balance sheets deleveraged and excess housing stock unwound. Combined, these lay the foundations for sustainable recovery. In 2013, fiscal tightening exerted a headwind to growth, but this is now easing allowing GDP growth to accelerate to 2.9% in 2014. For the Fed, setting the right monetary policy during this transition will be challenging. A glance at our leverage cycle suggests that the challenge as recovery gains traction over time is to avoid a build-up of excess leverage. This is not an immediate concern to our minds. Although we forecast household credit expansion, our forecast for household income growth is higher, entailing some further reduction of the household debt-to-income ratio.

UK housing credit has been boosted by government measures: Supported by policy initiatives, UK housing is staging a recovery. This is highly dependent on mortgage loan conditions and the BoE will be keen to keep rates low. We expect the Bank to lower the unemployment rate threshold on its forward guidance from 7.0% to 6.5% (and reduce the NAIRU from 6.5% to 6.0%). The hope medium-term, is that this housing-driven recovery will eventually become broader based with stronger confidence, consumption, exports, corporate investment and lower unemployment. Much will depend, however, on euro  area recovery as of 2015. Longer-term, a possible UK referendum on EU membership remains a point of uncertainty.

Euro area still facing headwinds: Individual euro area economies are in very different stages on the leverage cycle. Germany is the most advanced, followed by France, Italy and Spain. For several euro area economies, financial fragmentation and fiscal austerity remain serious headwinds. 2014 will see the arrival of a Single Supervisory Mechanism. As we discuss in Box 10, progress on a Single Supervisory Mechanism continues to disappoint and our base line remains for only a gradual repair of credit channels. Moreover, structural reforms are also not progressing at the desired pace, albeit with significant variation from country to country. The danger for the euro area is to become trapped in a lost decade of very low growth and low inflation. The ECB still has options. The real game changer opportunities, however, reside with governments to deliver quantum leaps on reform – at both the euro area and national levels. For now, progress remains disappointingly slow.

Summing up our view, 2014 will thus be the first year post crisis when advanced economies make an increased contribution to global GDP growth.

* * *

Good luck

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/q589SMOSGnw/story01.htm Tyler Durden

Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

Money-losing Italian supercar maker Maserati, a subsidiary of money-losing Italian run-of-the-mill automaker Fiat, has some challenges. It sold 6,288 cars worldwide in 2012, down 30% from its all-time record in 2008 of 9,000 cars. In order to become profitable, and help its parent become profitable, it wants to force-jump those sales to 50,000 by 2015. Multiplying sales by a factor of eight in three years, just to become profitable? I wonder who did the math.

But it’s not entirely pie in the sky. The number of orders nearly tripled during its year ended July, from the number of units sold in the prior year, though manufacturing bottlenecks have limited actual dealer sales so far.

“The numbers show that the United States is still our largest market globally, but that China has taken the lead for certain models such as the Quattroporte,” Maserati brand chief executive Harald Wester told Reuters in August.

But the company faces a couple of problems in China.

One is the perception that Italian high-end cars are less reliable than their German competitors – a perception Maserati had to fight, Christian Gobber, managing director of Maserati Greater China, told The Wall Street Journal.

Another is crummy service. Maserati doesn’t have much of a service operation in China, and its parts distribution center in Shanghai is run by a third party. “It’s a headache for owners of Maserati; even in Beijing there are few places that provide maintenance service,” explained Michael Ye, a real-estate professional. He liked the Quattroporte’s “fashionable and dynamic design,” but dreading the aftermarket service, he ended up buying a Porsche Cayenne. 

Maserati isn’t blind to the problem. The company is looking into beefing up its parts and service operations as more Maseratis roll over the curb. Eventually customers might see service levels “more in line” with German high-end automakers, but as of yet, Gobber said, a new parts distribution center was still in the “study phase.”

And then there is Chinese President Xi Jinping’s crackdown on lavish spending by government officials as part of a larger crackdown on corruption that he wove into his plan late 2012. He meant business. Sales of supercars, which had soared since the Financial Crisis, suddenly dropped late last year, and have continued to drop, including those of Ferrari and Lamborghini. Corrupt officials simply can no longer afford to show off the fruits of their corruption [read…. Supercars In The US, Japan, and China: How QE And Corruption Boosted Sales].

But Maserati sales in China are booming. The number of dealerships is expected to reach 40 by the end of the first quarter and 60 by the end of 2014. For the first 10 months, the company delivered 2,000 cars, with another 1,000 cars to be delivered by the end of this year, Mr. Gobber said. That’s up from about 900 for the entire year 2012.

China, with 4,938 total orders for the first nine months – the company is having trouble building them – is still Maserati’s second largest market, behind the US, for now, but orders for its hottest model, the Quattroporte, reached 3,956 in China, the most anywhere in the world.

But who the heck are these eager buyers, now that corrupt officials have to think twice before splurging on them?

In the US and Europe, 95% of the buyers are male. The average age is 55. Turns out, the cliché is actually a reality: wealthy guy, going through midlife crisis, ends up buying a supercar, perhaps at the spur of the moment, now that he can afford it.

But not in China. There, the average buyer is 37 years old – and 40% are “very successful young businesswomen who love European craftsmanship and want to be chauffeured in their new Quattroportes,” Maserati CEO Harald Wester told Automotive News Europe.

As is the case with rich Chinese men, these young women don’t want to fight it out themselves in the endless traffic jams. Forget the screeching tires as the light turns green, the heel-and-toe downshift ahead of a turn with no visibility, the sheer thrill of a four-wheel drift through that turn, the rush that comes from blasting out of the turn, V-8 screaming near the red line, the rush of having escaped near-certain death merely by your infinitely honed driving skills and the noble piece of machinery that you paid such a fortune to obtain. They’d rather sit in the back and be chauffeured around.

And those Quattroportes cost a lot of moolah in China where the government slaps on hefty import duties and confiscatory luxury taxes. Entry-level econo-models with a V-6 engine start at the equivalent of $277,000, according to Automotive News Europe. Fully equipped V-8 models retail for about $440,000.

How is Maserati’s Quattroporte different from the models Ferrari and Lamborghini offer? They have to rely on corrupt officials to make their numbers, and when corrupt officials fail to materialize, sales drop. The entry-level Quattroporte is priced below the corruption limit of 2 million yuan, and that may help. But why does it appeal to young rich Chinese women? Maybe it’s the way it looks, maybe it’s the sound of the name in Chinese, or maybe it’s just young rich Chinese women who think they’re going to change the world.

BYD, the name of a Chinese electric vehicle maker, stands for “Build Your Dream.” Maybe that’s what they’re trying to do in China. But here, they’re building a nightmare: broken promises, falsehoods, design flaws… funded by American taxpayers. And they paid Chinese workers in California $1.50 per hour to do it. Read….. American Boondoggle Meets Chinese Methods

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/T_87Gr9ntCA/story01.htm testosteronepit