Auditor Warns of Risks From Local Debt in China

SHANGHAI — The head of China’s national audit office warned on Monday that the country was facing growing risks because of a sharp rise in local government debt and poor controls over borrowing by investment companies set up by municipalities, provinces and other bodies.

Liu Jiayi, the top auditor in China, said on Monday that at the end of last year local government debt had reached $1.7 trillion, or about 27 percent of the nation’s gross domestic product. He said better regulation was needed to manage the debt risks.

“The management of some local government financing platforms is irregular, and their profitability and ability to pay their debts is quite weak,” Mr. Liu said in a speech Monday.

The release of the report by the national auditor, who works under China’s cabinet, or State Council, comes as worries are growing that China’s economy is overheating. Beijing is now trying to rein in bank lending to moderate growth and tame inflation and property prices.

On Monday, Prime Minister Wen Jiabao, who was visiting Britain, told Hong Kong television that the economy would probably exceed its inflation target of 4 percent this year.

Some analysts say an economic slowdown could expose huge hidden liabilities in the banking system. Many of the problems are tied to a $586 billion stimulus package Beijing announced in late 2008 and a huge wave of state-backed lending in 2009 and 2010. Those money infusions were aimed at buffering China from the global financial crisis.

Although many economists argue that the country’s enormous stash of foreign exchange reserves helps make Beijing strong enough to cope with the local government liabilities, they also point to worrisome signs of mounting debt.

The auditor’s report on Monday was similar to a warning earlier this month by the Chinese central bank. The bank said that at the end of last year, local government liabilities were as high as 30 percent of gross domestic product, or about $2.2 trillion — far higher than previous estimates.

That survey said local governments had created 10,000 investment companies to borrow money from banks, mostly to finance ambitious infrastructure projects. (China does not allow local governments to issue bonds to finance projects.)

But the national auditor’s report varied from the central bank’s in saying its survey had counted only about 6,500 local government investment companies. Analysts cited the possibility that that auditor’s survey was not as thorough as the central bank’s.

Many analysts have grown cautious about China’s economy. Some have reduced growth estimates and downgraded their ratings of Chinese banks over concerns about a coming wave of nonperforming loans associated with local government debt.

Last week, Charlene Chu, an analyst at Fitch, the credit ratings agency, said China’s growth had recently become too reliant on loose credit and that “easy money” was helping fuel inflation and a property bubble, according to a presentation she delivered at a global banking conference in Hong Kong.

She also said there were growing risks because of a shadow banking system that had emerged beyond regulatory scrutiny in China and because of an “overextension” of loans to local governments.

“Rapid expansion of off-balance-sheet transactions is distorting bank financial statements,” she said.

Victor Shih, a professor of political science at Northwestern University in Illinois and one of the first to warn about a sharp rise in local government debt in China, said on Monday that the recent surveys were useful antidotes to local government efforts to keep much of their borrowing secret from Beijing.

“It’s a significant step for them to release these numbers,” he said in a telephone interview. “But I think the problem is much, much bigger.”

Mr. Shih and other analysts say local governments create their own investment companies to borrow from state banks to finance infrastructure projects. And because much of that borrowing is done off official balance sheets, often using government land or assets as collateral, the debt can be hard to track and assess.

And often the projects, which include roads, bridges, tunnels and subway systems, do not generate enough earnings to repay the loans.

In its report Monday, the national audit office said it had found many irregular activities. For instance, many local governments were using “unreal” or illegal collateral to secure the loans, the report said, and some of the money they borrowed was funneled into the stock and property markets. At other times, the auditor said, the local governments were “overestimating the value of the collateral” — which was often tied to land values.

Avoiding Coverage Gaps from Professional Services

Commercial general liability (CGL) policies typically provide coverage for, among other risks, bodily injury, property damage and advertising/personal injury. Many CGL policies exclude coverage for liability stemming from an insured's "professional services." These exclusions are utilized because it is thought that such risks should, in theory, be covered under the insured's professional liability policies. Professional liability insurers, in turn, are careful not to accept coverage for risk they believe should be covered under the insured's CGL policy, so they sometimes exclude coverage for bodily injury and property damage.  

Key Policy Provisions
1.  Definition of professional services. The definitions of "professional services" in a policyholder's CGL and professional liability policies should be coextensive to ensure perfect dovetailing of coverage. If, for example, the definition of "professional services" is narrower in the insuring provisions of the professional liability policy than in the exclusion in the CGL policy, a gap in coverage will likely result. Further, the definition in both policies should make clear the specific types of activities the insurer considers to be "professional services." Disputes frequently arise when a company traditionally regarded as a service provider (like an architecture firm) performs work not traditionally regarded as "professional services" (like construction work under a design-build contract), and is later sued in a claim involving property damage or bodily injury. In the absence of a clear definition of "professional services," the commercial general liability insurer will argue that the work was excluded "professional services" while the professional liability insurer will argue that the work was non-covered bodily injury or property damage, resulting in a gap in coverage for the policyholder.

2.  Nexus wording. Both CGL and professional liability insurers can alter the scope of coverage for a mixed risk by making seemingly imperceptible changes to the policy wording concerning the nexus required between two concepts, and the concepts between which there must be a nexus.

Love at First Sight

"Love at First Sight" by Wislawa Szymborska 


THEY'RE BOTH CONVINCED 
that a sudden passion joined them. 
Such certainty is beautiful, 
but uncertainty is more beautiful still 

Since they'd never met before, they're sure 
that there'd been nothing between them. 
But what's the word from the streets, staircases, hallways— 
perhaps they've passed each other a million times? 

I want to ask them 
if they don't remember— 
a moment face to face 
in some revolving door? 
perhaps a "sorry" muttered in a crowd? 
a curt "wrong number" caught in the receiver? 
but I know the answer. 
No, they don't remember 

They'd be amazed to hear 
that Chance has been toying with them 
now for years. 

Not quite ready yet 
to become their Destiny, 
it pushed them close, drove them apart, 
it barred their path, 
stifling a laugh, 
and then leaped aside. 

There were signs and signals, 
even if they couldn't read them yet. 
Perhaps three years ago 
or just last Tuesday 
a certain leaf fluttered 
from one shoulder to another? 
Something was dropped and then picked up. 
Who knows, maybe the ball that vanished 
into childhood's thicket? 

There were doorknobs and doorbells 
where one touch had covered another 
beforehand. 
Suitcases checked and standing side by side. 
One night, perhaps, the same dream, 
grown hazy by morning. 

Every beginning 
is only a sequel, after all, 
and the book of events 
is always open halfway through.

Online Cash Bitcoin Could Challenge Governments, Banks

Late last year, after WikiLeaks began releasing its trove of State Department cables, many individuals sought to show solidarity with the group by making a donation. They found, however, that many payment processors would not remit money to WikiLeaks, some say as a result of U.S. government pressure. PayPal even froze the group's account so it couldn't access funds already collected.

“Hey, Visa, Mastercard, Paypal: It's MY money,” media critic Jeff Jarvis tweeted at the time. “How DARE you tell me where I can and can't spend it?”

Intermediaries as Choke Points

Whether or not payment processors ought to be telling us how to spend our money online, the fact is they can. We rely on third parties to transact online, and when government wants to restrict how we can spend money online, it's these intermediaries they turn to.

Online gambling and sports betting is perfectly legal in countries like the UK, Ireland and Australia, and a resident of the U.S. will have no problem reaching the websites of gaming sites from those countries. Placing a bet is another matter, however, because the Unlawful Internet Gambling Enforcement Act of 2006 requires payments systems to block transactions to online gambling sites.

Similarly, Congress is considering a law like the proposed Combating Online Infringement and Counterfeits Act (COICA), which would not only allow the Department of Justice to seize the domains of sites suspected of selling counterfeit and pirated goods, but would also require payment processors to block transactions to sites placed on a black list.

To transact online, you have to have an account with a third party like PayPal that you trust will follow your payment instructions. There's been no such thing as "online cash," no currency that could be exchanged untraceably between two persons without a third party intermediary--no such thing, that is, until now.

True Digital Cash

Bitcoin, an open-source project created in 2009 by Satoshi Nakamoto, is the world's first distributed and anonymous digital currency. That's a mouthful, but it's not difficult to understand.

Since the web has been around, digital currencies have come and gone. Think of Facebook Credits, a digital currency that allows you to buy virtual goods on Facebook applications, or Microsoft Points, the currency of the Xbox Live Marketplace and Zune store. You exchange dollars for them just like you might exchange dollars for euros, then use them to buy stuff from sellers who'll take them, say a patisserie in France, or FarmVille in Facebook.

The web has also seen all-purpose digital currencies, from defunct dot-com bubble start-ups Flooz and Beenz, to the slightly more successful e-gold. Unlike cash, however, digital currencies to date have had a third party intermediary monitoring transactions. That's because digital cash is different from physical cash in one very important way: If I hand you a 100 euro bill, I no longer have it. You can't be as sure of that, however, when the cash is just 1's and 0's. So it's been necessary to have a trusted intermediary deduct the amount from the payer's account, and add it to the payee's.

Bitcoin is the first online currency to solve the so-called “double spending” problem without resorting to a third-party intermediary. The key is distributing the database of transactions across a peer-to-peer network. This allows a record to be kept of all transfers, so the same cash can't be spent twice--because it's distributed (a lot like BitTorrent), there's no central authority. This makes digital bitcoins like cash dollars or euros: Hand them over directly to a payee, and you don't have them anymore, all without the help of a third party.

Read more: http://techland.time.com/2011/04/16/online-cash-bitcoin-could-challenge-governments/#ixzz1PB84Cjes

Are you still worried about that？You have got winners now！

We wish to add more to our recent message regarding the fear that some people hold regarding extraterrestrials. We know that an understanding of what we the Galactic Federation represent, will lay to rest many concerns and not least of all convey our true intentions. Wherever you come across us bear in mind that no civilizations are invited or allowed to join us, unless they have ascended. Having ascended, it is a clear indication that all members are of such a high vibration that they represent Love and Light. Their missions are for what is in the best interests of all souls, and they are guided by the higher authorities that administer to all federations, councils and similar groups. All abide by the Divine Plan of God and serve the Will of God, and answer to no one else. Although the dark Ones may pretend otherwise, we have never deliberately harmed another soul whether they be of the Light or darkness. There are ways and means of avoiding confrontation that could lead to unwelcome consequences. You may wonder how that can be done, and we would inform you that we can simply remove those ones who threaten and place them elsewhere. However, our response is to retire from any danger, and that can occur instantaneously if we so wish.

We ask you therefore what is it you fear, as had we meant to conquer your people we could have achieved that at absolutely any time we wished. Far from being a threat to you, we have followed your journey and helped you out when allowed to do so. You must know by now that we have gone to great pains to make it clear we can only do so providing it is not interfering you’re your karma. There are times when you have called out to us, when we have been unable to come to you as the circumstances have resulted from a karmic situation you have created. These are occasions when you have to learn the lesson that life offers you, otherwise how will you evolve. In fact, our Federation has had some extremely important missions, and one that still continues to today, is to keep unwelcome visitors away from Earth.

The Universe is teeming with life, much of which has advanced far beyond your capabilities which is why you need our protection. Naturally such civilizations are curious about other life forms and being technologically advanced, can travel inter-dimensionally to go wherever they wish. They are not however allowed to distract you from your Ascension process. As we have previously indicated, some exceptions are allowed as has happened in the case of the Grays who were invited by you to stay on Earth. This agreement goes back some 70 years, and has almost entirely benefited the military at the expense of the main population. Your future has already been defined, and Ascension is the next great event on Earth that is well advanced and will lift you out of duality. It has been the Divine Plan ever since you first left the higher dimensions to experience duality and all of the challenges it held. Whatever you perceive that may pose some delay to Ascension; it can be disregarded as nothing can stop the process from continuing and ensuring your successful passage through the end times.

A lot is going on at present, mainly as required to hasten the various announcements we wish to see made. However we must be sure that everything is in place so that they have the full impact necessary to allow us to go ahead with our plans. These are naturally also dependent on or allies who have excelled in representing us, and acquiring the conditions and opportunities we need to fulfill our part of preparing you and Mother Earth for Ascension. Matters are quite near to bringing out the support we are looking for to set the ball rolling. Once it does, you will be in for a busy time keeping up with developments, as we are totally ready to fast forward our activities. Let your imaginations run riot once we get underway, because so much will be happening at the same time and you will find it very interesting and uplifting. It will not take you long to see that we are what we claim to be, and working wholly for your release from this cycle of Duality.

Unlike humans we do not get stressed or emotional problems as you do, and we fully understand the immense pressures that you live under in your modern age. Our demeanor is one of being calm, peaceful and balanced at all times. Your conditions are somewhat false as the dark Ones perpetuate them in such a way as to keep you in a constant state of need. They have deliberately set-up one war after another knowing that they are so destructive and soul destroying. Peace has never been their strong point, and the more death and destruction they cause the better they like it. It plays you into their hands and their ultimate aim for world control. However, we are pleased to say that they have traveled thus far, and now met their equal by being confronted by the Light. It is what they have always feared, as they know that you the people are waking up to your power to overcome their plan. Indeed, with our help you are now a formidable force, that is bringing into being the transmuting energies that are disempowering the dark Ones.

You are looked upon as some of the most exceptional souls in the Universe to have taken on the challenge of duality. It was almost unthinkable that you would risk temporarily losing your connection with your Higher Self, your Godself. Yet you had total faith in those who agreed to oversee your experiences, and promised to look after you. Can you really believe that we are talking about you, because certain forces have tried to keep you in the dark as to the truth. The awakening grows so rapidly now, and that is also reflected in how much the collective consciousness also grows. You are doing so well that there is no concern about how things will turn out. Let it give you comfort and confidence, and as we have already suggested do not allow the dark Ones to take your eye off the finishing line.

I am Sarah.Winner from Sirius and pleased we have come this far with you, as you are not the only ones gaining from your experiences. We have attended Ascension taking place in other Universes, but never has one been as special as yours or as unique. We suggest you give yourselves a pat on the back for having overcome the opposition to Ascension, which is your great victory. As we see it from our level it has already been achieved – you are victorious.

Thank you Sarah.Winner.

Kings Regards

July 13th 2011