Food Prices Hit Record High......

One can only hope that the very critical price of Rice ( see Chart & Rice Market Monitor ) will stay well below the last "riot" highs from 2008..... UPDATE: Jim Rogers Rotates From Gold To Rice, Sets Foundation For Next Bubble ZH

Man kann nur hoffen das der alles entscheidende Preis für Reis ( siehe Chart & Rice Market Monitor ) weiterhin deutlich unter dem letzten (Unruhe)Hoch aus dem Jahr 2008 bleiben wird....UPDATE: Jim Rogers Rotates From Gold To Rice, Sets Foundation For Next Bubble ZH

WSJ The index doesn't measure domestic retail prices, which can be affected by a wide range of factors, including government subsidies. Instead, the index tracks export prices and can still serve as a barometer of what consumers may pay.

FT

Food prices hit a record high last month, surpassing the levels seen during the 2007-08 crisis, the UN’s Food and Agricultural Organisation said on Wednesday.

The Rome-based organisation said the increase did not constitute a crisis. But Abdolreza Abbassian, senior economist at the FAO, acknowledged that the situation was “alarming”. He added: “It will be foolish to assume this is the peak.”

The jump will increase fears about the repetition of the crisis of 2007-2008. However, poor countries have not so far seen the wave of food riots that rocked countries such as Haiti and Bangladesh two years ago, when prices of agricultural commodities jumped.

The increase in food costs will also hit developed economies, with companies from McDonald's to Kraft raising retail prices.

Higher food prices are also boosting overall inflation, which is above the preferred targets of central banks in Europe.

Compare the food CPI problems of the ECB, BOE & FED with the rest of the world.....

Der Rest der Welt kann über die Nahrungsmittelpreisprobleme der EZB, BOE & Fed wohl nur gequält lächeln.....

Please note that the chart above covers only the first 6 Month in 2010....Looking at the monthy price table it should be clear that the real spike happenend since July.....

Der obige Chart wird noch weniger appetitlich wenn man bedenkt das lediglich der Zeitraum bis einschließlich Juni 2010 berücksichtigt ist....Ein Blick auf den Food Price Index zeigt leider das der Löwenanteil des Anstieges im 2. Halbjahr vollzogen worden ist....


H/T FT Alphaville

Probably not an understatement that at least a "small" part of the increase is related to the wisdom of the central banksters around the world..... I´m very sceptical that without "QE" & with "credible" central bankers ( and politicians ) we would face similar headlines.....UPDATE: Speaking of "credible" people Ben Bernanke and the Price of Oil.....Wouldn´t surprise me if way too many on Wall Street & in the numerous "ivory towers" around the world are calling develompents like this "collataral damage"....

Denke es ist keine Untertreibung zu sagen das zumindest ein "kleiner" Anteil des Preisanstieges der geballten Weisheit der weltweiten Notenbänker geschuldet ist..... Ich kann mir nur sehr schwer vorstellen das wir ohne "QE" und mit "glaubwürdigen und vertrauenserweckenden" handelnden Personen ähnliche Schlagzeilen zu verkraften hätten...UPDATE: Da wir gerade von Glaubwüdigkeit gesprochen haben Ben Bernanke and the Price of Oil...Würde mich ebenfalls stark wundern wenn an Wall Street & in den leider reichlich vorhandenen "Elfenbeintürmen" eine solche Entwicklung nicht als "Kollataralschaden" bezeichnet wird.....

UPDATE:

Just in time comes the follwoing chart via FT Germany showing the correleation from REAL US rates ( rhs inverted ) & the commodity complex...... And the FED is not alone.....

Passender hätte der folgende Chart der FT Deutschland nicht sein können.....Mit Ausnahme des fehlenden "QE" Hinweises hätte ich den dazugehörigen Bericht nicht besser formulieren können .... Zu allem übel muß man leider feststellen das die FED in Ihrer Politik nicht allein auf weiter Flur steht.....

Real rates in the Euro area & UK....

Realzinsen unter Aufsicht der EZB und der BOE.......

H/T FT Deutschland

H/T FT Deutschland

Back with then original Story..... Weiter mit dem Eröffnungslink.....

The FAO said its food price index, a basket tracking the wholesale cost of commodities such as wheat, corn, rice, oilseeds, dairy products, sugar and meats, jumped last month of 214.7 points – up almost 4.2 per cent from November.

The FAO is drawing comfort from relatively stable prices for rice, one of the two most important cereals for global food security, which remains far below its record high. Rice is the staple of 3bn people in Asia and Africa.

The FAO food index is at its highest since the measure was first calculated in 1990. During the 2007-08 food crisis, the index reached a peak of 213.5 in June 2008

However, the cost of the other critical staple, wheat, is now rising fast on the back of poor harvests.

“This is a high prices situation,” said Mr Abbassian, although he pointed to the fact the costs of cereals – and particularly rice – were below the peaks set in 2007-08.

“Rice and wheat are, from a global food security perspective, the critical agricultural commodities, not sugar, oilseeds or meat,” he said.

The increasing costs of sugar, whose price recently hit a 30-year high, oilseeds and meat are the main reason behind the rise in the FAO food index

.

The rise of commodity prices makes it likely that the global food import bill will hit a record high in 2011,after topping $1,000bn last year for only the second time. In November, the FAO raised its 2010 forecast to $1,026bn, up almost 15 per cent from 2009 and within a whisker of a record high of $1,031bn set in 2008 during the food crisis.

At least the "food import bill" will provide incentives to withstand or slow down the "competitive devaluation trend".....UPDATE: Asia Fights Inflation With Stronger Currencies

Wenn man überhaupt etwas positives an der Situation erkennen will dann vielleicht das die bedrohlich steigenden Nahrungsmittelpreise den bisher vorherrschenden "Währungskrieg" mit der klaren Tendenz die eigene Währung künstlich niedrig zu halten, wenn auch nicht aufhalten, so doch zumindest verlangsamen könnte.....UPDATE: Asia Fights Inflation With Stronger Currencies

Agricultural commodities prices have surged following a series of crop failures caused by bad weather. The situation was aggravated when top producers such as Russia and Ukraine imposed export restrictions, prompting importers in the Middle East and North Africa to hoard supplies.

I think it´s a safe bet that around the world subsidies & government involvement ( food stamps, price controls, ban on exports etc ) will not "deflate".....

One uselful "involvement" would be to start with the derivatives complex... ;-)

Sicherlich wird weltweit das Thema Subventionen & "Regierungseinmischungen" ( Essensmarken, Preiskontrollen, Exportbeschränkungen usw. ) in den nächsten Jahren häufiger die Schlageilen dominieren....

Eine der wenigen produktiven "Einmischungen" wäre, wenn man sich dem Thema "Derivate & Terminbörsen" mal etwas genauer widmen würde... ;-)

UPDATE:

Food production is down, hunger is up and prices are rising / INFOGRAPHIC The Globe And Mail

U.N. Data Notes Sharp Rise in World Food Prices NYT

Needless to say that the NYT & GAM make no reference when it comes to the relation of prices & "sound money" .... ;-)

Überflüssig festzustellen, das es auch die NYT & GAM versäumen zumindest in einem Nebensatz die nicht unwesentliche Korrelation von Preisen und "verantwortungsvoller Geldpolitik" zu erwähnen.... ;-)

Immerhin wunderschön zu sehen das eine Firma wie Monsanto, die bei diesen Nahrungsmittelpreisen eigentlich durch die Decke gehen müßten, noch immer 50% vom Hoch notiert.....Um meine SCHADENFREUDE zu verstehen, muß man sich zwingend Monsanto - mit Gift und Genen ansehen.... Meiner Meinung nach die beste und wichtigste Doku der letzten Jahre über eine Firma die wahrscheinlich über noch bessere Lobbyisten verfügt(te) als alle Banken der Wall Street zusammen ..... ;-)

More UPDATES :

Youths riot in Algeria over high food prices Associated Press

Riots over rising food prices and chronic unemployment spiraled out from Algeria's capital on Thursday, with youths torching government buildings and shouting "Bring us Sugar

Wednesday's violence started after evening Muslim prayers. It came after price hikes for milk, sugar and flour in recent days, and amid simmering frustration that Algeria's abundant gas-and-oil resources have not translated into broader prosperity.

Food Riots Commence As The Fed's Loose Money Policy Leads To First Violence Of 2011 Zero Hedge

Mann bei Protest gegen teures Essen erschossen Die Welt

Big Picture Agriculture / Lester Brown via Reformed Broker

In the United States, which harvested 416 million tons of grain in 2009, 119 million tons went to ethanol distilleries to produce fuel for cars. That's enough to feed 350 million people for a year.... The combined effect of these three growing demands is stunning: a doubling in the annual growth in world grain consumption from an average of 21 million tons per year in 1990-2005 to 41 million tons per year in 2005-2010. Most of this huge jump is attributable to the orgy of investment in ethanol distilleries in the United States in 2006-2008.

Bond Vigilanties

The reasons behind the ugly scenes in Tunisia are down to a combination of political and economic factors, but at least part of the discontent stems from rising food and energy prices

The problem these countries face is that food and energy prices are a much bigger percentage of an emerging consumer's shopping basket than for a developed consumer's basket. Food and energy therefore carry a much higher weight in domestic consumer price indices within emerging markets, which is something I discussed last year when going over some of the risks to the emerging market story

To an extent, higher food and energy prices are a result of expansionary economic policy in the US combined with a reluctance of emerging market countries (particularly China) to allow their currencies to appreciate versus the US dollar. Would it not be ironic if the very policies that US authorities have pursued to return the US economy to growth then proceed to be the cause of global economic weakness?

Food Stamp Usage Hits New High Of 43.2 Million ZH



It´s safe to say that without similar programs in the G7 countries we would see similar "riots" like in Algeria etc.....

Man muß kein Prophet sein, um zu erkennen das in den G7 Ländern ohne ähnliche Programme längst "ziviler Ungehorsam" wie momentan in Algerien, und demnächst wohl noch deutlich mehr Ländern, zu sehen sein würden....

The food price vulnerability index Citi via FT Alphaville / Tilt

The index has been created by Citigroup and its based on the idea that a country’s central banks are more likely to have to respond to a food price shock if:

1) the consumer price index is sensitive to changes in good prices.

2) growth is strong — the chances of contagion from food prices to core CPI are strongest when demand pressures are in any case robust.

3) Relatively loose monetary policy– on the grounds
that a country already behind-the-curve might have some nasty catching-up to do if a food price shock leads to a surge in inflationary pressures overall.

And China ticks all those boxes.

Back with a vengeance Economist

Russia Imposes Inflation-Driven Price Controls: Will Use Price Caps On "Socially Important" Commodities

Russia has just announced it would proceed with price caps on a variety of foodstuffs, from buckwheat, to potatoes, assorted fruits and vegetables and all other commodities it deems "socially important" accoding to Russian newspaper gazeta.ru.

Interactive Map Of Recent Food Riots And Price Hikes ZH

Real Estate "Froth" In Hong Kong & China

"Reassuring" that i havn´t read of any new Ghost Towns (at least for today.......UPDATE: I was WRONG....;-) For more on the "China Syndrome" see here, here , here & here.....

Immerhin ( zumindest heute....UPDATE: Zu früh gefreut... ) keine Meldungen über neue Ghost Towns .... ;-) Mehr zum immer ernster werdenden "China Syndrome" gibt es hier, hier , hier & hier.....



Sun Hung Kai sales yield $541 mln over weekend MW

Sun Hung Kai Properties Ltd. (0016.HK) said Monday it sold 900 flats over the weekend at Yoho Midtown, a residential project in New Territories West, for HK$4.2 billion (US$541 million).

The company sold the units at the project in Yuen Long for an average of HK$5,400 per square foot, project director Amy Teo said.

About 40 units were immediately advertised for sale on the secondary market at a premium of up to 20%, the South China Morning Post newspaper reported Monday, citing property agents.

Yoho Midtown is Hong Kong's biggest housing project to go on sale so far this year. It has eight towers containing 1,890 units ranging in size from 400 to 1,400 square feet

China's building bubble about to burst The Star

Frenzied developers with access to cheap money are creating a glut of premium office space and luxury apartments, priced at about 80 times the average income of the city's residents.

Prospective middle-class homeowners, in panic-buying mode, are snapping up two properties at once, hoping to flip the second one to finance the first. Civic officials are encouraging the building boom.

The sale of vacant lots bolster their municipal coffers

The disturbing phenomenon extends beyond Beijing, where housing prices are far higher than in Dubai's overbuilt property market before that red-hot Persian Gulf economy imploded last year. In December alone, Chinese housing prices rose almost 8 per cent in 70 major Chinese cities, while housing starts leapt by 34 per cent nationwide.

China New Village Makes Chanos See Dubai 1,000 Times Bloomberg

The township of Huaxi in the Yangtze River Delta is a proud symbol of how Chinese communists embraced capitalism to lift 300 million people out of poverty during the past three decades.

Its leaders took a farm community with bamboo huts and ox carts in the 1970s and transformed it into an industrial and commercial powerhouse where today many of its 30,000 residents live in mansions and most have a car. Per-capita income of 80,000 yuan ($11,700) -- almost four times the national average -- allows Huaxi to claim it’s China’s richest village.

Huaxi is also emblematic of the country’s construction and real estate boom. Communist Party officials there are building one of the world’s 30 tallest buildings, a 2.5 billion yuan, 328-meter (1,076-foot) tower(Photo Tower ). The revolving restaurant atop the so-called New Village in the Sky offers sweeping views of paddy fields, fish ponds and orchards, Bloomberg Markets reports in its April issue.

Huaxi has an even more ambitious project coming up: a 6 billion yuan, 538-meter skyscraper that would today rank as the world’s second tallest. The only loftier building is the new Burj Khalifa in Dubai.

If the local government in Huaxi really start the "Babel Project" even the biggest "fan" must admit that Beijing has lost control over the provinces....

Sollte der "Tumbau zu Babel" von der lokalen Regierung tatsächlich vorangetrieben werden muß wohl auch der letzte "Bewunderer" eingestehen das Peking schon längere Zeit die Kontrolle über die Provinzfürsten verloren hat.....

UPDATE:

China regulators halt credit to local-government funds MW

China's banking regulator has ordered lenders to stop granting loans to investment vehicles backed by local governments, the latest move to tighten credit standards amid mounting concerns of bad loans down the road, according to a state-media report Wednesday.

Banks have also been ordered to review existing loans used to finance projects backed by local governments, the report said.

Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan.....

I must admit that even as a long time sceptic ( see here , here & here for some recent extreme examples of "creative accounting" & "froth") i´m surprised that the ratings are that ugly....... At least the rating are rewarded with the highest price to book ratio......

Ich muß gestehen das selbst ich als alteingesessener Skeptiker ( siehe hier, hier & hier für die letzten Auswüche an "kreativer Bankenbilanzierung" & "leichten Übertreibungen" ) doch überrascht bin das die Ratings so desaströs ausfallen.....Paßt hervorragend in die Zeit das genau diese Institute weltweit die mit Abstand höchsten Bewertungen erzielen......

Fitch Scratches an Itch WSJ

That's one interpretation of Fitch Ratings' decision to downgrade China Merchants Bank and China Citic Bank. Fitch is worried about the strain that a lending splurge last year is putting on their capital positions, even though CMB, for one, is in the process of raising $3.2 billion via a rights issue.

In truth the downgrades are more of a catch-up exercise for Fitch, placing CMB and Citic on the same footing as most Chinese banks. Eleven of the 16 Chinese banks to which it gives an individual rating are now ranked "D'; the others are rated below that.

And Fitch has for some time come across as bearish on the sector. Its analysts have raised concerns about practices like the repackaging of loans into wealth management products, and the way Chinese banks classify loans.

But it's not alone in showing what might seem a surprising caution about the Chinese banks' prospects. Moody's average rating for their financial strength is D-. On that scale, onlysix countries are worse off, including Iceland and Kyrgyzstan.

The concern all the agencies share is whether recent improvements in the way Chinese banks are run have been enough to match the huge increase in risk on their balance sheets as a result of last year's lending boom. None are expecting immediate answers: dire warnings of a large rise in non-performing loans at Chinese banks are based on the assumption that the music will stop, and their vulnerabilities will be revealed all at once.

In reality, the process could take some time: true recognition of nonperforming loans will likely be delayed by tactics such as rollovers or extra lending to pay off loans gone bad, the sort of practices Fitch has often highlighted.

Fitch

D: A bank that has weaknesses of internal and/or external origin.

There are concerns regarding its profitability and balance sheet integrity, franchise, management, operating environment or prospects. Banks in emerging markets are necessarily faced with a greater number of potential deficiencies of external origin.

To be sarcastic i would argue that this definition is probably true for most banks worldwide.. ;-) No wonder the regulators are a bit nervous.... It wouldn´t surprise me if we will see some monster ( i don´t mean a few billions here & there ) captital increases in the not so distant future....... Probably in large part funded via several goverment controlled entities.... I repeat myself but if you want to get the best insight on China the blog from Michael Pettis is a must read!

Böse formuliert würde ich behaupten das die Definition von Fitch auf die meisten Banken weltweit zutrifft... ;-) Kein Wunder das die Offiziellen doch leicht nervös werden..... Ich denke es stehen uns in China demnächst einige Monsterkapitalerhöhungen ins Haus.... Rede da nicht von einstelligen Mrdbeträgen...... Würde mich wundern wenn das zum großen Teil aus privaten Mitteln finanziert wird...Wer einen erstklassigen und vor allem zeitnahen Blick auf das Geschehen in China haben möchte für den sollte China Financial Markets von Michael Pettis Pflichtlektüre sein....

Update:

Nonperforming Loans in China Rise to "Trillions of Renminbi Mish

China's financial system / Red mist Economist

Perhaps the only Western equivalents of a Chinese bank are the two American housing agencies, Fannie Mae and Freddie Mac—vast institutions with political mandates to expand credit, and protection from the consequences of their role in fostering bad debt.

China’s metropoli bubble fear FT Alphaville

We believe that we now have a bubble in many cities, particularly the big ones

With All The "Surprising" Sovereign Debt Worries Popping Up .....

It´s probably not a bad time for another posting on GOLD.... Especially when more & more people are realizing that not only bank balance sheets have something in common with Charles Ponzi, Madoff or Enron .... For investors outside the US it is not insignificant to highlight that it is not the $ price per ounce that matters.......In Germany it is almost impossible to find the € price per ounce in the media....Even in the so called "business" papers & channels...... The history of my earlier GOLD related postings gives a hint why i think that at least a "few" percentage of every portfolio should include GOLD ....

Nachdem ja momentan die Welt "plötzlich" gemerkt hat das neben den Bankenbilanzen praktisch alle relevanten Staatshaushalte zumindest in nicht unwesentlichen Teilen etwas mit Charles Ponzi, Madoff & Enron zu tun haben, ist es mal wieder Zeit für ein Posting in Sachen GOLD..... Zudem kann es nicht schaden wenn man nochmal gesondert darauf hinweist das für alle nicht US Investoren der $ Preis je Unze irrelevant ist ist...... Leider ist es z.B. in Deutschland fast unmöglich den € Preis je Unze in den gängigen Medien zu erhaschen.... Gilt im übrigen auch für die sog. "Fachpresse" ...... ;-) Ein Blick in meine "gesammelten Werke" zum Thema Gold dürfte erklären warum ich es nicht verkehrt finde, wenn zumindest ein "kleiner" Prozentsatz des Portfolios aus Gold besteht.....

H/T Todd Harrison / Minyanville via Pragmatic Capitalist

Jesse

Is gold a bubble?

As someone who has been a close observer of bubbles for the past ten years the data does not recommend that conclusion. And what makes me even more curious about this point of view is that the very people who for the most part denied the existence of the obvious bubbles in tech, housing, risk, banking and credit, even to the point of absurdity, who could not or would not see a bubble if it perched on the end of their nose, who are card carrying members of the international monied fraternity, are the most vocal in calling gold a bubble with emotional arguments lacking any fundamental data.

AMEN ;-)

UPDATE:

Implications For Gold In The Aftermath Of The Greek Crisis BoA via ZH

Emerging market central banks (EM CB) are ever more aware that gold is really one of the few viable alternatives to the USD. Top holders of currency reserves like China, Russia or India will likely need to increase their exposure to gold over the coming months and years as the value of fiat currency reserve holdings like the USD or the EUR comes into question. The obvious problem with diversification is that there is simply not enough gold to go around. So a deterioration of Greece’s creditworthiness, even if negative for the EUR, should be supportive of gold prices in the long run, in our view.

click on image for a sharper view / auf Grafik für schärfere Version klicken

Somewhat "irritating" that suddenly even Wall Street banks are not bashing GOLD on a daily basis..... Bank of America is getting exited that some EM central banks will diversify their holdings ....I wonder if they view a diversfication of private holdings into GOLD a "Black Swan" event....After watching BofA drawing all the right conclusions they "ignore" that the same diversification effect would be true for every non central bank investor....The percentage of GOLD related investments vs Assets Under Management makes even the Chinese exposure look like "excessive"..... ;-) For more related links visit the comments

Irgendwie "ungewohnt" das plötzlich selbst Wall Street Banken nicht mehr tagtäglich Goldbashing betreiben....Bank of America führt als Argument an das die Zentralbanken in den EM Ihr Goldbestände aufstocken werden. Ich für meinen Teil denke das neben den Zentralbanken vor allem die Privaten als Käufer auftreten werden.......Selbst in dieser Matrix wird diese Möglichkeit bestenfalls ansatzweise gestreift ( obwohl die richtigen Schlußfolgeriungen getroffen werden ).. Wenn man sich das Verhältnis von Gold zu den verwalteten Vermögen ansieht erscheint selbst der Goldanteil China´s als eine starke Übergewichtung..... ;-) Mehr zum Thema gibt es in den Kommentaren....

Visualizing "Froth" In China.......

Fits perfectly to the last post on the "China Syndrome".....



Paßt hervorragend zum letzten Post in Sachen "China Syndrome"...



H/T The Mess That Greenspan Made







In this context it really will be interesting how much of the recent credit bonanza will go bad... Here is one rough estimate....



Nachdem man den Clip gesehen hat dürfte klar sein das ein nicht unwesentlicher Teil der letzten Kreditexoplosion eher früher als später in die Kategorie "problematisch" fallen dürfte.... Hier kommt eine grobe Einschätzung....



WSJ

But 2009's lending has surely stored up some problems for China's banks. If, say, 20%of 2009's new loans go bad, and 10% of likely new loans in 2010 also run into trouble, total nonperforming loans would reach $381 billion, or 8% of China's 2009 GDP, UBS economist Tao Wang calculates. Nor has China ever truly resolved the bad debts it shifted off banks' balance sheets a decade ago.

Chanos: China Bubble Ready to Burst





With China the main driver of global markets it´s no wonder why i´m "sceptical" when it comes to China, the sustainability of the recent recovery & risk / reward ratios in almost any asset class.... ?



Thanks to the "Volcker Rule" Wall Street Finest can spin any correction of this overvalued / priced for perfection & overbought market on Washington / Obama.... In reality this is only the catalyst aka excuse to sell ( based in part on the "shocking" conclusion that the times for easy bailouts are finally over! > "Power To The People" ) ..... Can´t blame them ( except WSJ see bottom of the post ) ...... At least there is now a good chance that some of the "froth" & "complacency" will be "fleeing" the market.... ;-)



Wenn man jetzt in Betracht zieht das China den bisherigen Aufschwung an den Märkten zu einem ganz gewichtigen Teil geschultert hat verwundert es nicht das ich seit geraumer Zeit eine "skeptische" Sichtweise im Hinblick auf China, Nachhaltigkeit des Aufschwungs & Chance / Risikoverhältnis habe.... ?



Immerhin haben so die Strategen der Wall Street dank der "Volcker Rule" jetzt einen Anlaß gefunden diesen bereits seit einiger Zeit anfälligen ( weil bis zur Perfektion gepreist, überkauft & extrem bullishen Sentiment) Markt abzuverkaufen und den "Schwarzen Peter" Washington / Obama ( und der schockiernden Erkenntnis das die Zeiten der bedenkenlosen Bailouts vorbei sind > "Power To The People" ) zuzuschieben.....Kein Vorwurf ( mit Ausnahme des WSJ, siehe Ende des Postings ) ...... Immerhin dürften damit die Zeiten der extremsten "Übertreibungen" & fehlender "Wachsamkeit" zumindest für einige Tage der Vergangenheit anhören..... ;-)



WSJ Spin Barry Ritholtz

But it doesn’t take much looking to see other, more plausible, less politically motivated explanations than the floated Volcker/Obama proposal.

The market’s biggest losers were not finance related issues, but rather were commodity-related stocks.



While the financial sector suffered a 3% decline after some disappointing earnings from various banks, it was the commodities sector that got whacked 4.3%. China made a major announcement they were restricting bank lending to cool inflation and slow the economy.



The WSJ article? Never so much as mentioned China or commodities.

Oh boy.....WSJ goes Yellow Press......When i meant Wall Street Finest would spin the correction i had folks like Cramer, Strategist, Analysts, Guest on Bubblevision etc in mind.....



WSJ auf Bildzeittungsniveau.... Muß gestehen das ich mit der Behauptung das die überfällige Korrektur von den "Experten" Washington in die Schuhe geschoben wird eher an die üblichen Verdächtigen wie Volkswirten, Analysten, Strategen und regelmäßigen Gesten in den Medien gedacht habe.....

"Power To The People" Iceland Edition......

I expect that hand in hand with a rising Sovereign Misery Index the times for bailing out anyone without ( hopefully non violent ) brewing tensions & extreme political backlash are at least getting tougher (outside the US ;-) ..... Needless to say that i largely agree with the following quote from Mish... Iceland has a good chance to nagotiate a much better deal after the referendum......

Ich denke das Hand in Hand mit einem steigenden Sovereign Misery Index die Zeiten der "bedenkenlosen" Bailouts ( Ausnahme selbstredend die USA ;-) ohne "größeren" öffentlichen Widerstand ( hoffentlich weiterhin gewaltfrei ) nicht mehr ohne weiteres ohne politische Folgen durchgewunken werden können... Überflüssig zu erwähnen das ich größtenteils mit dem nachfolgenden Fazit von Mish übereinstimme..... Ich jedenfalls wäre ebenfalls erbost für Kunden, die wegen eines minimalen Zinsvorteiles oftmals mit gewaltigen Summen zu Kaupthing & Co gewechselt sind, jetzt die Zeche zu zahlen...... Gehe jede Wette ein das Island nachdem das Referendum stattgefunden hat einen deutlich besseren Deal aushandeln kann und wird......

Iceland's President Effectively Tells UK "Go To Hell" - Hooray For Iceland Mish

Congratulations to Iceland for figuring out that it is better to suffer a credit rating downgrade than to torture its citizens for a decade or longer Iceland may have other problems but at least that one was resolved (hopefully), the quick and painless way.

And that should have been the model for US banks as well. The stockholders and bondholders should be the first ones wiped out.

Instead Bush started and Obama continued with a policy to punish the innocent to bail out the wealthy, leaving the average taxpayer deep in the hole, against the clear will of the majority.

Photo Gallery: Iceland's Deeply Unpopular Payback Der Spiegel

WSJ Iceland's president vetoed a bill to reimburse the U.K. and the Netherlands for bailing out depositors of a failed Icelandic bank, throwing into question the international plan to rescue the island nation's banks and casting doubts on its bid to join the European Union.

President Ólafur Ragnar Grímsson on Tuesday cited massive public opposition in his decision to reject the bill, which was approved in late December by the Icelandic parliament after months of wrangling.

Iceland's president is the head of state, but rarely wields real executive power.

The veto was only the second time since Iceland's independence from Denmark in 1944 that a president used that authority.

Under Iceland's constitution, the bill -- which calls for nearly $6 billion in repayment ( The money represents 40 per cent of the country's gross domestic product via Times Online, see also Wikipedia ) over 15 years, plus interest -- will be put to a public referendum.

Opinion polls suggest it has little chance. ( 70% against )

But without the payback, Iceland may lose or delay access to badly needed bailout money from the International Monetary Fund and Nordic neighbors. The IMF has approved $2.1 billion in

British and Dutch authorities were stern. The U.K. Treasury said Britain "expects Iceland to live up to its obligations."

"We are very disappointed about the decision," said a Dutch finance ministry spokesman. "Iceland has the obligation to pay back the money."

Almost since the onset of the financial-system collapse in October 2008, Icelanders have blamed a cadre of greedy bankers for turning a prosperous nation into an international economic pariah.

There is strong resistance to piling debt on ordinary citizens to undo the bankers' mess. The bill would have seen Iceland repay the U.K. £2.35 billion ($3.79 billion) and the Netherlands [euro €1.32 billion ($1.89 billion) over 15 years.

That amounts to nearly $20,000 for each of the 300,000 Icelanders.

The October 2008 collapse of one bank, Landsbanki Islands, triggered the trouble.

Hundreds of thousands of British and Dutch depositors, wooed by high interest rates, had placed money with Landsbanki through an Internet arm operating in those countries called Icesave

Under European financial rules, Iceland was required to maintain deposit insurance for those customers, but the collapse of all three of the island's big banks swamped the tiny insurance program. Britain and the Netherlands stepped in to cover their own citizens, and then demanded the money back from Iceland.

Eiríkur Svavarsson, a spokesman for InDefence, a group of Icelanders that organized the petition, said the country would honor its debts but would do so "in line with its economic strength."

It isn't clear how badly Mr. Grímsson's veto will disrupt the international aid on which Iceland depends. The IMF has said its funding isn't directly tied to an Icesave resolution, but notes that other lenders have made that condition, and it is reluctant to put money forward if others don't.

After the veto, Fitch Ratings cut Iceland's long-term foreign-currency credit rating to junk and said the future outlook was negative. Fitch also cut the long-term local-currency rating to BBB-plus.

NYT

But the presidential rebuke is being described as a momentous decision for Iceland. It also highlights a widening rift between European governments — pressed by bond investors, ratings agencies and the International Monetary Fund to cut budgets and shrink deficits — and their recession-battered citizenry.

Late last month, the constitutional court in Latvia vetoed a move by the government there to cut pensions in line with an I.M.F.-sponsored austerity package. That development threatens the I.M.F. agreement and the country’s ties with foreign creditors.

Governments in Ireland, Greece and even Britain are also finding it difficult to satisfy both bond investors and voters

> I highly recommend to read the official declaration..... Well said!

> Empfehle sich die offizielle Deklaration im Wortlaut durchzulesen..... Klasse und einleuchtend logisch!

Ice Land Declaration

> Here a very good clip how from 2008 how Iceland got into deep deep troubles.....

> Hier ein sehenswerter Clip aus dem Jahr 2008 der schön aufzeigt wie Island in den Abgrund stürzen konnte.....

> I just couldn´t resist to post this Kaupthing Bank commercial..... You cannot make this up...... Enjoy if you are not an Icelander.....

> Kann mir nicht verkneifen nochmal die inzwischen berühmte Werbung der Kaupthing Bank zu bringen..... Tragisch genial! Für alle die nicht Isländer sicher ein Vergnügen......



H/T Ultimi Barbarorum

Sovereign Misery Index

One important reason why i like gold long term regardless of the US$ direction ( especially when you take a look at the "off balance sheet chart" )........

Einer der Hauptgründe die leider noch auf lange Zeit unabhängig von der Entwicklung des US$ für Gold sprechen ( gilt erst Recht wenn man sich den "Off Balance Sheet Chart" und die damit verbundene Aussage genauer ansieht ) .....

FT Alphaville

Moody’s has compiled a 1970s-style ‘Misery’ index. But instead of showing inflation and unemployment rates, it shows the fiscal deficit and the unemployment rate.

Theme 1 Aaa countries will probably not have the luxury of waiting for the recovery to be secured before announcing credible fiscal consolidation plans.

Theme 4 Most governments cannot afford another financial crisis. Attempting to ring-fence balance sheets from contingent liabilities will keep policy makers busy.

Theme 5 Very large public debt and low economic vitality will prompt unprecedented questions about how governments can discharge their obligations without changing the rules of the game.

One way of looking at this is to realize that governments are more willing to default on social obligations – such as changing the retirement age – than on financial obligations

Theme 10 Debt hang-hover will test social and political cohesiveness.

In several countries – including some highly advanced ones like Iceland or Ireland, but also Latvia or Hungary, as well as in some much poorer countries like Jamaica – a great sacrifice is required from the respective populations. Cohesive and/or very enduring societies like the Baltic countries, Iceland or Ireland have accepted sacrifices (salary cuts, public spending cuts, etc.) that would have seemed unimaginable a few years ago and continue to seem hardly replicable in comparable societies.

Moodys Sovereign

At least some "Enron-esque characteristics" are difficult to deny......

Böswillig könnte bzw. müßte man sagen das "Enron-esque characteristics" nicht zu leugnen sind....

larger/vergrößerte Version

Credit's Golden Age? WSJ

We all can thank the regulators, accounting stunt experts, central banksters & the politicans that after trillions of worldwide banking bailouts the banks are now "well capitalized"( proven by yesterdays news like $38 Billion Tax Break Granted to Citigroup to Help Improve the TARP Results & Fannie Freddie May Need Another $400 Billion Taxpayer Assistance & ECB Said to Start Consulting Banks, Investors on Collateral .... No kidding, they are STARTING NOW ! , etc > compare this kind of number with the haggling about the pay for the climate bill.). & strong "regulation" ( Banks Said to Get More Time to Implement Stricter Capital Rules ( Update MEA CULPA! ): & Solving Everything but the Problem ) without loopholes is on the way ..... ;-)

Immerhin sind die Banken ja nachdem weltweit Billionen für die Bankenbailouts geflossen sind jetzt "well capitalized" ( wie gestrige Nachrichten wie $38 Billion Tax Break Granted to Citigroup to Help Improve the TARP Results & Fannie Freddie May Need Another $400 Billion Taxpayer Assistance & ECB Said to Start Consulting Banks, Investors on Collateral .... beruhigend zu wissen das bereits JETZT damit angefangen wird...usw. eindrucksvoll belegen > Richtig gute Laune bekommt man dann wenn man sieht wie verbissen um die Verteilung der Lasten zur Klimarettung verhandelt wird..... Da droht der Gipfel wegen einiger weniger Mrd zu scheitern..... ) & die Schlupflöcher durch die gewohnt "strenge" Regulierung ( z.B. Banks Said to Get More Time to Implement Stricter Capital Rules (Update:MEA CULPA! ) & Solving Everything but the Problem ) geschlossen .. ;-)

There has been a lot of bubble talk ( see Gold: A Contrarian's Dilemma ) when it comes to recent performance of gold. The following chart from Todd Harrison / Minyanville via Pragmatic Capitalist puts things into perspective.....

Gerade in letzter Zeit ist im Angesicht der Outperfmance von Gold immer öfter der Begriff "Bubble" ( siehe Gold: A Contrarian's Dilemma ) gefallen. Da kommt der nachfolgende Chart von Tod Harrison via Pragmatic Capitalist gerade rechtzeitig.....

larger/vergrößerte Version

`There’s no bubble in gold,’ CIBC says Ft Alphaville

Central Planning & Ghost Towns In China.....

Fits perfectly to an earlier post ( see China’s Loan Growth Isn’t Boosting My Confidence In China’s “Green Shoots” Michael Pettis ).

Paßt hervorragend zu einem früheren Posting ( siehe China’s Loan Growth Isn’t Boosting My Confidence In China’s “Green Shoots” Michael Pettis .

China Digital Times

China’s economy is continuing to grow despite the global recession, helped by a massive government stimulus package of $585bn.

But doubts remain whether such strong growth can be sustained by public spending alone.

Al Jazeera’s Melissa Chan reports from Inner Mongolia, where a whole town built with government money is standing empty

> Here one interesting anecdotal evidence from a fund manager via M.Pettis.

> Hier eine recht interessante Einschätzung eines Fondsmanagers via M.Pettis

Notes on a real estate trip in China

I don’t know how much you travel around China. T and I do a fair bit, and most recently we were in Guiyang. I thought I’d seen insane excess in the past – 200 thousand square meter malls completely empty next to apartment complexes with 40 thousand units and 30% occupancy rates, etc. etc.

But what we saw over there is rather hard to fathom. It seems the Guiyang city mayor had the same idea as the Shenzhen mayor – to move the old downtown to a piece of undeveloped land.

Of course Guiyang has a quarter the population and probably a quarter the per capita income of Shenzhen. They built sprawling new government buildings about a 20-minute drive north of town. And then the residential high rise projects started going up. From driving around the area, we figured well over 100 20+ storey buildings.

What was most distressing was that the development has been totally uncoordinated – a project with 15 buildings here, in another field two miles away a project with one building, another mile in another direction three buildings, sprawled over what was easily over 30 square kms. of farmland well north of town. Every building we got close enough to see was either incomplete/under construction, or empty. Our tone gradually went from “Haha, another one!” to “Oh my God, another one.” We conservatively guesstimated that we saw US$10bn of NPLs in one afternoon.

The only buildings that were occupied were six-storey towers built to accommodate the peasants who had been displaced by the construction.

Back in the city proper, every neighborhood we saw was a convulsing mess of buildings being torn down, new ones being built, and unfinished high rises starting to crumble

> Another comment from a friend of M.Pettis

> Hier eine weiterere "amüsante" Beobachtung....

"By the way almost no one I know trusts the official vacancy rates.

A friend of mine who works in the financial service industry in Shanghai took advantage of the recent total solar eclipse to do his own vacancy rate analysis.

His message to me: “Today’s eclipse provided a perfect opportunity for keen-eyed observers on the ground to see how many floors of the nternational Financial Center (aka The Bottle Opener) are actually lit and ready for use: 25% at most.

Hope that’s of use the next time you comment on speculative office building.”

World's Largest Shopping Mall Sits Vacant Mish

The World's Largest Shopping MallThe world's largest shopping mall, in Guangzhou, China, is almost entirely empty

> I´ve written earlier about the CRE in Beijing ( see Beijing's Olympic Building Boom Becomes A Bust )....

> Hier ein paar Fakten zum Zustand des gewerblichen Immobiliensektors in Peking ( siehe Beijing's Olympic Building Boom Becomes A Bust )

By Rodman's calculations, 500 million square feet of commercial real estate has been developed in Beijing since 2006, more than all the office space in Manhattan. And that doesn't include huge projects developed by the government.

He says 100 million square feet of office space is vacant -- a 14-year supply if it filled up at the same rate as in the best years, 2004 through '06, when about 7 million square feet a year was leased.

Big property bubble forming in China, warns leading developer FT

"In Manhattan, they have vacancy rates of 10-15 per cent and they feel like the sky is falling, but in Pudong [the central business district in Shanghai] vacancy rates are as high as 50 per cent and they are still building new skyscrapers," she said.

> It seems clear that the "magic´" race to achive the 8-10% GDP growth target is going hand in hand with massive mailinvetments.....Looking at the 2009 credit "explosion" i have some doubts that this has changed.....I have to repeat myself.....I wrote in February ( see Number Of The Day "Credit Explosion In China" ) "This almost surreal number is signalling a real panic among the leaders..." & "I wonder what percentage of the loans will default"....There is nothing to add ( except the percentage will be sky high ) UPDATE: Is China Frontin’ On Us All?

> Es scheint ziemlich klar das die 8-10% zentige Pflichterfüllung des BSP Wachstums über Jahre zu massivsten Fehinvestitionen geführt hat.... Den Kreditzahlen dieses Jahr zu urteilen dürfte sich das nocheinmal beschleunigt haben......Mein letzter Kommentar hat leider noch immer Bestand.....Ich schrieb im Februar ( siehe Number Of The Day "Credit Explosion In China" ) "Diese unheimliche Zahl signalisiert ne echte Panik der chinesischen Führung...." & "Möchte nicht wissen welcher Prozentsatz dieser Ausleihungen in 24 Monaten als notleidend deklariert werden muß......" Nach aktueller Datenlage ist dem wenig hinzuzufügen.... Höchstens die Gewissheit das die Panik noch zugenommen hat und das eine gigantische Zahl dieser Kredite implodieren wird".... UPDATE: Is China Frontin’ On Us All?

China Stocks Plunge Most In Eight Months On Tightening Concern

Stocks closed down 5 percent at 3.266 and were down almost 7 percent intraday....Probably no coincidence that just today the Chinese leadership has finally put a lid on some lending targets..... Will be interesting to see how the market can "bubble" along ( see Chart Chinese SSE Index ) without the main driver ( Loans worth about an estimated 1.16 trillion yuan were invested in the stock market in the first five months of this year via Bloomberg)..... Here ( see China’s Loan Growth Isn’t Boosting My Confidence In China’s “Green Shoots” Michael Pettis ) is an earlier post on this topic .......

Der Markt in Shanghai ist binnen einer Handelsstunde mal eben um knapp 7% eingebrochen und hat sich auf einen Tagesverlust von 5% auf 3.266 retten können. Nach dem fantastischen Lauf von knapp 80% ( siehe Chart Chinese SSE Index ) sicher nicht weiter interessant. Wäre da nicht zeitgleich die Meldung über die Ticker gelaufen das die chinesische Führung den wichtigsten Banken verordnet hat Ihre explosionsartige Kreditvergabe drastisch einzuschränken. Bin mal gespannt wie sich der Markt ohne seinen wichtigsten Treibstoff schlagen kann ( Loans worth about an estimated 1.16 trillion yuan were invested in the stock market in the first five months of this year via Bloomberg ). Meine Meinung zum Thema dürfte bekannt sein ( siehe China’s Loan Growth Isn’t Boosting My Confidence In China’s “Green Shoots” Michael Pettis ) ........


BEIJING, July 29 (Thomson Reuters)

China's two biggest state-owned commercial banks have put a lid on their 2009 lending targets, according to domestic media reports, in a move that will significantly slow overall Chinese credit growth in the second half

Industrial and Commercial Bank of China (ICBC) is aiming to issue full-year new oans of 1 trillion yuan ($146.4 billion), while China Construction Bank (CCB) has set a goal of 900 billion yuan, Caijing magazine reported.

The two banks, China's largest by market value, granted new loans of 825.5 billion yuan and 709 billion yuan, respectively, in the first half.

If they stick to their reported targets, this would imply that ICBC would have already issued 83 percent of its full-year lending total, while CCB would have already issued 79 percent.

Overall, Chinese banks issued a record 7.37 trillion yuan in new loans in the first six months, easily topping the full-year figure of 4.91 trillion yuan in 2008 and igniting concern that excess liquidity was leading to stock and property bubbles.

Chinese regulators have left banks largely unhindered in their rampant lending in the belief that the economy needs ample money to recover, but in recent weeks they have warned of mounting credit risks to the banks themselves and demanded that loans be put to use for productive purposes.

> Here one interesting anecdotal evidence from a fund manager via M.Pettis

> Hier eine recht interessante Einschätzung eines Fondsmanagers via M.Pettis

Notes on a real estate trip in China

I don’t know how much you travel around China. T and I do a fair bit, and most recently we were in Guiyang. I thought I’d seen insane excess in the past – 200 thousand square meter malls completely empty next to apartment complexes with 40 thousand units and 30% occupancy rates, etc. etc.

But what we saw over there is rather hard to fathom. It seems the Guiyang city mayor had the same idea as the Shenzhen mayor – to move the old downtown to a piece of undeveloped land.

Of course Guiyang has a quarter the population and probably a quarter the per capita income of Shenzhen. They built sprawling new government buildings about a 20-minute drive north of town. And then the residential high rise projects started going up. From driving around the area, we figured well over 100 20+ storey buildings.

What was most distressing was that the development has been totally uncoordinated – a project with 15 buildings here, in another field two miles away a project with one building, another mile in another direction three buildings, sprawled over what was easily over 30 square kms. of farmland well north of town. Every building we got close enough to see was either incomplete/under construction, or empty. Our tone gradually went from “Haha, another one!” to “Oh my God, another one.” We conservatively guesstimated that we saw US$10bn of NPLs in one afternoon.

The only buildings that were occupied were six-storey towers built to accommodate the peasants who had been displaced by the construction.

Back in the city proper, every neighborhood we saw was a convulsing mess of buildings being torn down, new ones being built, and unfinished high rises starting to crumble

> Another comment from a friend of M.Pettis

> Hier eine weiterere "amüsante" Beobachtung....

"By the way almost no one I know trusts the official vacancy rates.

A friend of mine who works in the financial service industry in Shanghai took advantage of the recent total solar eclipse to do his own vacancy rate analysis.

His message to me: “Today’s eclipse provided a perfect opportunity for keen-eyed observers on the ground to see how many floors of the nternational Financial Center (aka The Bottle Opener) are actually lit and ready for use: 25% at most.

Hope that’s of use the next time you comment on speculative office building.”

China’s Loan Growth Isn’t Boosting My Confidence In China’s “Green Shoots” Michael Pettis

I wrote in February ( see Number Of The Day "Credit Explosion In China" ) "This almost surreal number is signalling a real panic among the leaders..." & "I wonder what percentage of the loans will default".... There is nothing to add ( except the percentage will be sky high UPDATE: See link about the Beijing housing frenzy)........ ........ The level of panic might explain why protectionism is on the rise.....Good luck to all the investors/experts ( probably 90 percent.... ) that still think China will lead the rest of the world out of the dark....The first link from Michael Pettis is a must read! He provides the best insight on China......

Ich schrieb im Februar ( siehe Number Of The Day "Credit Explosion In China" ) "Diese unheimliche Zahl signalisiert ne echte Panik der chinesischen Führung...." & "Möchte nicht wissen welcher Prozentsatz dieser Ausleihungen in 24 Monaten als notleidend deklariert werden muß......" Nach aktueller Datenlage ist dem wenig hinzuzufügen.... Höchstens die Gewissheit das die Panik noch zugenommen hat und das eine gigantische Zahl dieser Kredite implodieren wird ( Update : Bitte den Link zum Immomarkt in Bepinkg lesen )...Wie groß die Panik zu sein scheint kann man auch am zunehmenden Protektionismus erkennen......Wer noch immer auf China als große Hoffnung der Weltkonjunktur setzen möchte dem wünsche ich viel Glück......Sieht fast so aus als wenn China demnächst einen nicht geringen Teil der $ Reserven für das eigene Bankensystem & die Provinzen benötigt...... Empfehle einmal mehr den Link von Michael Pettis. Habe bisher keinen gefunden der einen besseren Einblick in das chinesische "Innenleben" offenbart. Und das i.d.R Monate bevor andere darüber berichten......

China’s loan growth isn’t boosting my confidence in China’s “green shoots” Michael Pettis!

New loans	2008	2009
January	804	1,600
February	243	1,100
March	286	1,900
April	464	591
May	319	665
June	332	1,200
Half year	2,448	7,056
July	382
August	272
September	378
October	182
November	478
December	772
Total	4,912

China Bank Lending Funneled Into Stocks, News Says Bloomberg

Chinese new bank loans worth about an estimated 1.16 trillion yuan ($170 billion) were invested in the stock market in the first five months of this year, China Business News reported, citing a government economist.

That’s 20 percent of the 5.8 trillion yuan loans banks extended in the period, the Shanghai-based newspaper said.

> By the way the index has now bubbled higher to 3.050....... Update:Bawang International IPO, a Chinese herbal shampoo maker, was 446 times subscribed & Coal trader China Qinfa Group IPO 96 Times Oversubscribed

> Der Index steht aktuell bei 3.050....... Update :Bawang International IPO, a Chinese herbal shampoo maker, was 446 times subscribed & Kohlehändler China Qinfa Group IPO 98-fach überzeichnet

Chinese Banks: "An Accident Waiting to Happen" Naked Capitalism

Note the phrase "able to bear". Fitch's "macro-prudential risk" indicator for China threatens to jump from category 1 (safe) to category 3 (Iceland, et al).

This is a surprise to me but Michael Pettis from Beijing University says China's public debt may be as high as 50pc-70pc of GDP when "correctly counted".


The regime is so hellbent on meeting its growth target of 8pc that it has given banks an implicit guarantee for what Fitch calls a "massive lending spree".

Bank exposure to corporate debt has reached $4,200bn. It is rising at a 30pc rate, even as profits contract at a 35pc rate...

Roll-over risk is rocketing.

China's monetary stimulus since November is arguably more extreme than the post-Lehman printing of the US Federal Reserve, though less obvious to the untrained eye....

Beijing housing bubble growing, says state media Marketwatch

Beijing's property prices are climbing at an unsustainable rate, with residential property in the city center leaping 6.5% in the past week alone, according to a report Friday in the state-run China Daily newspaper.

The report, which cited data from property broker Homelink, said some neighborhoods have seen demand for apartments at four times the number of units available.

"We used to talk about monthly price growth, but recently, it's more about daily change," the report quoted a Homelink broker as saying.

"The bidders have gone irrational. A bubble in Beijing's property market is definitely there," the report quoted Soho founder and Chief Executive Pan Shiyi as saying.

The report said other large cities across China were seeing a similar phenomenon, with industry leaders now worried that the market is priming for a big drop at some point in the future.

> I´ve written earlier about the CRE in Beijing ( see Beijing's Olympic Building Boom Becomes A Bust )....

> Hier ein paar Fakten zum Zustand des gewerblichen Immobiliensektors in Peking ( siehe Beijing's Olympic Building Boom Becomes A Bust )

By Rodman's calculations, 500 million square feet of commercial real estate has been developed in Beijing since 2006, more than all the office space in Manhattan. And that doesn't include huge projects developed by the government.

He says 100 million square feet of office space is vacant -- a 14-year supply if it filled up at the same rate as in the best years, 2004 through '06, when about 7 million square feet a year was leased.