http://globaleconomicanalysis.blogspot.com/2014/08/new-yuan-loans-and-shadow-banking.html

Wednesday, August 13, 2014 2:05 AM

New Yuan Loans and Shadow Banking Collapse in China; Record Bank Deposit Slump

A major alarm bell just rang in China with the release of July credit figures according Macro Business Australia. Chinese Credit Just Collapsed and shadow banking with it.

Here are a couple of charts.

Yuan Loans

New yuan loans were 385.2 bn versus 780.0 bn expected and and prior was 1080.

Shadow Banking

Aggregate social financing was 273 bn yuan versus 1500.0 bn expected and prior was 1970 bn implying that shadow banking credit contracted 112 bn in the month.

Record Bank Deposit Slump

Bloomberg reports China Record Bank-Deposit Slump in July Erodes Lending Capacity.

***

China Credit Growth Declines Sharply

The Wall Street Journal reports China Credit Growth Declines Sharply.

****

And......

http://globaleconomicanalysis.blogspot.com/2014/08/japan-gdp-plunges-68-consumption-down.html

Tuesday, August 12, 2014 11:22 PM

Japan GDP Plunges 6.8%, Consumption Down 19.2%, Private Investment Down 9.7%

In the wake of an inane sales tax hike Japan’s GDP Shrinks 6.8%, Most Since 2011

Gross domestic product shrank an annualized 6.8 percent in the three months through June, the Cabinet Office said. That was less than the median estimate of 37 economists surveyed by Bloomberg News for a 7 percent drop. Unadjusted for price changes, GDP declined 0.4 percent.

“The probability is high that the July-September quarter will see a rebound,” said Takeshi Minami, chief economist at Norinchukin Research Institute Co. in Tokyo. “But the fall in real incomes and weakness in production could weigh on the recovery.”

The contraction followed a surge in growth in the three months through March when consumers and companies rushed to make purchases before the tax rose. Abe is striving to sustain a recovery after initial success in fighting off two decades of economic stagnation.

Household consumption plummeted at an annualized pace of 19.2 percent from the previous quarter, while private investment sank 9.7 percent, highlighting the damage to demand by the 3 percentage point increase in the levy.

The higher sales tax hit consumers who’ve seen little growth in incomes and rising costs of living as the Bank of Japan stokes inflation with unprecedented easing. Consumer prices rose 3.6 percent in June from a year earlier -- nine times the increase in total cash earnings -- with food prices climbing 5.1 percent.

Imports tumbled an annualized 20.5 percent while exports fell 1.8 percent. That’s sapping the manufacturing sector and shows the yen’s 16 percent drop against the dollar over Abe’s term has yet to drive outbound shipments.

The windfall in corporate profits that the weaker yen delivered to many Japanese manufacturers last year also shows signs of fading.

“Price increases are spreading,” said Koya Miyamae, senior economist at SMBC Nikko Securities Inc. in Tokyo. “It’s highly likely the government will declare Japan is out of deflation this year before making a decision on the next sales-tax hike.”

*****

http://www.zerohedge.com/news/2014-08-12/japanese-gdp-plunges-68-consumer-spending-collapses-most-record

Japanese GDP Plunges 6.8% As Consumer Spending Collapses By Most On Record

Submitted by Tyler Durden on 08/12/2014 19:58 -0400

Japan

Compared to the 3.6% drop in GDP when Japan last hiked its consumption tax in 1997, today's Q2 GDP collapse of 6.8% annualized is an utter disaster (even if it is slightly better than the expected -7.0% expectations thanks to a surge in the deflator). Inventory additions added 1.0% growth. Consumer Spending collapsed 5.2% QoQ - the most on record. Of course, in the traditional of Keynesian hockey-sticks, this XX% collapse in Q2 is expected to surge back to a 2.5% growth figure in Q3 and lead Japan to the holy grail once more.. only it didn't quite work out that way last time for Japan. Simply put this is the worst posible outcome for bulls, small beat not enopugh to rejuice QQE. As a gentle reminder of just what happened in 1997 - the last time Japan hiked taxes- we provide the eerily analog chart below...

Japanese GDP growth was almost twice as bad as the last time Jap[an hiked its taxes...