China and the impending debt crisis

There is a giant debt-bubble looming over the Chinese economy. Despite measures by the Chinese government to reform, China’s private sector rely heavily on state lending by state banks. With debt mounting at twice the rate of growth, Let’s do an in-depth analysis into China’s debt and what it is made up of, to better understand the underlying factors of the second-biggest economy in the world.

The Soft Commodities

The term “softs” refers to commodities which are identified as primarily tropical, such as coffee, cocoa, sugar, cotton, and orange juice. Their contracts are traded on the ICE (Intercontinental Exchange) based in New York. We will not discuss the thinly traded orange juice market; the lack of liquidity makes it inappropriate to be traded by anyone but a hedger. As a side note, I heartily recommend that all speculators watch the classic comedy movie “Trading Places.” It gives a hilarious though exaggerated look at the historic trading floor, where the various commodities were traded. I clearly remember the excitement on the trading floor the evening that it was filmed, when we saw actors Dan Akroyd and Eddie Murphy march onto the trading floor and make millions in orange juice futures while humiliating the trading family of Duke & Duke.