Tuesday, March 22, 2016

China's Five-Star Hotels

That is what awaits you at the end of the Bo$ton Globe road:

"Starwood gets unsolicited takeover bid; deal with Marriott at risk" by Chad Bray and Leslie Picker New York Times   March 14, 2016

NEW YORK — Two years ago, Anbang Insurance Group, an insurer little-known outside of China, bought the fabled Waldorf Astoria for $1.95 billion. Now, the company hopes to expand its hotel empire with an unsolicited bid to acquire Starwood Hotels & Resorts Worldwide, operator of the Westin, W, and Sheraton chains, for $76 a share in cash.

A consortium of investors, led by Anbang, aims to derail Starwood’s $10.8 billion cash-and-stock tie-up with Marriott International, which is set to be considered by shareholders this month. 

Some might say conspiracy.

The other bidders in the consortium include the buyout firm J.C. Flowers & Co. and Primavera Capital Group, said a person with knowledge of the discussions who spoke on condition of anonymity.

The cash offer, made March 10 and announced by Starwood Monday, represents a significant premium to Marriott’s deal, which has been affected by a decline in the hotel operator’s stock price since it was announced in November.

On Monday, Starwood said its board had not changed its recommendation in support of the Marriott deal, but that it would carefully consider the outcome of its discussions with the consortium led by Anbang.

Starwood said it got a waiver from Marriott to allow it to engage in discussions and due diligence with the consortium. The waiver expires Thursday.

The cash offer by Anbang and its investment partners follows fast on the heels of a report that Anbang has agreed to acquire Strategic Hotels and Resorts from Blackstone Group in a deal valued at $6.5 billion, just months after Blackstone bought the company.

Strategic Hotels owns the Four Seasons hotels and resorts in Silicon Valley, Calif., Washington, and Jackson Hole, Wyo., the Fairmont and Intercontinental hotels in Chicago, and the JW Marriott Essex House Hotel in Manhattan.

Then what is with all the war talk coming from government and the pre$$?

In addition to its 2014 deal for the Waldorf Astoria, Anbang has bought an American insurer, Fidelity & Guaranty Life Insurance, for nearly $1.6 billion and a controlling stake in a South Korean life insurer.

The Chine$e en$uring us all a good life.

Anbang got its start as a car insurer supported in part by SAIC Motor Corp., China’s largest automaker. The company broadened its operations to sell investment products and other services and has made aggressive bets.

I don't like the look of that!

It was helped by the Chinese government’s move in recent years to give Chinese insurers greater freedom to invest their money, making them major players in real estate and other areas in China.

In other words, the Chine$e are becoming more like us -- and vice-versa, if you haven't noticed.

Shareholders of Starwood and Marriott are set to vote on whether to approve the merger on March 28. Marriott would receive a termination fee of $400 million if Starwood backed out of the deal.

The Marriott deal would create the world’s largest hotel company, with more than 5,500 owned or franchised hotels, for a total of 1.1 million rooms around the world.

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Can you tell that I'm tired of sifting through slop?

Also seeStarwood takes improved bid from Anyang

They have a nice breakfast buffet, too.

Related: China's Capital Flight 

They asked how are you paying for the room?

"China outlook cut as Moody’s warns of debt, reform risks" Bloomberg News  March 03, 2016

China’s credit-rating outlook was lowered to negative from stable at Moody’s Investors Service, which highlighted the country’s surging debt burden and questioned the government’s ability to enact reforms just days before leaders gather to approve a five-year road map for the economy.

So what? 

Whose Moody's, other than one of the ratings liars behind the MBS $windle? 

Why would anyone ever again listen to their "opinions." 

If anything, China at least appears somewhat more responsible and not as reckless as my own government.

The government’s financial strength may come under pressure if it takes on liabilities from troubled state-owned companies, while capital outflows have limited policy makers’ scope to stimulate the weakest economy in a quarter century, the ratings company said in a statement on Wednesday. State intervention in equity and foreign-exchange markets has heightened uncertainty about the leadership’s commitment to reform, Moody’s said.

That's pretty much all you need to know about the way the world works and who controls it.

Related:

"Few economic statistics have gone as quickly from obscurity to the center of attention from international financial markets lately as China’s foreign currency reserves. They are widely seen as the best barometer of how long China can avoid a possible devaluation someday of its own currency. Monthly changes in the reserves mainly reflect how much money is being sent out of the country by Chinese companies and families nervous about the country’s economic slowdown and sweeping anticorruption investigations. Over the last five weeks, the Chinese government has waged an aggressive campaign to stem the outflow, through almost daily pledges by officials not to devalue and through much tighter enforcement of the rules on sending money overseas. Late Monday afternoon came word that the policies are starting to bear fruit."

Hey, a lot can change in five days(!).

While markets shrugged off the outlook cut on Wednesday, it highlights concern among global investors that the ruling Communist Party will struggle to overhaul Asia’s largest economy at a time when capital is flowing out of the country and debt levels have climbed to an unprecedented 247 percent of gross domestic product.

That's all well and good, but it doesn't seem to be a problem when it comes to the AmeriKan government.

Chinese leaders will begin nearly two weeks of policy meetings on Saturday to map out how to tackle the nation’s economic challenges and meet the government’s goal of doubling per-capita income by 2020.

“The government’s ability to absorb shocks has diminished and we want to signal this in the negative outlook,” Marie Diron, a senior vice president at Moody’s, said in an interview on Bloomberg Television. Authorities “have stepped backward in their reform steps and so that is creating some uncertainty.”

The concerns flagged by Moody’s, which also included the risk of capital outflows and shrinking foreign-exchange reserves, have already manifested themselves in markets over recent months.

The cost to insure Chinese government bonds against default for five years has climbed about 38 basis points, or 0.38 percentage point, since mid-November to 134 basis points. That exceeds the cost of credit-default swaps on the Philippines, which has a Moody’s rating five levels below that of China.

The whole $y$tem is built on those looting $chemes. 

That is why the whole thing is collapsing.

Shanghai stocks, meanwhile, have dropped 20 percent this year and the yuan has slipped 0.8 percent in onshore trading against the US dollar. On Wednesday, credit-default swaps were little changed, while the Shanghai Composite Index climbed 4 percent on speculation the government will announce more economic stimulus measures. The yuan rose less than 0.1 percent.

Yes, let's continue with the same failed solutions yet one more time.

China’s Ministry of Finance sold 20 billion yuan of 10-year bonds at 2.82 percent and the same amount of 1-year notes at 2.15 percent after the Moody’s announcement on Wednesday. The yields were lower than prevailing rates in the secondary market.

“The ratings haven’t been changed, so I expect market reaction to initially be muted,” said Andy Ji, a Singapore-based foreign-exchange strategist and economist at Commonwealth Bank of Australia. “There’s no new information here, just recognition of the issues we’ve known for years.”

Pretty much sums up the entire experience of reading New England's flag$hip paper.

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Here is the Communi$t(??) $olution:

"Xi Jinping’s remedy for China’s economic gloom has echoes of Reagan" by Chris Buckley New York Times  March 04, 2016

BEIJING — With the world looking to China for assurance that it can manage its slowing economy and tumultuous stock market, President Xi Jinping has begun pushing a remedy that sounds less like Marx and Mao than Reagan and Thatcher.

Xi is calling his next big economic initiative “supply-side structural reform,” a deliberate echo of the nostrums of tax cuts and deregulation advocated by those conservative Western leaders in the 1980s.

That's when I started waving the sheet of surrender.

The new slogan, expected to receive top billing when China’s legislature convenes Saturday, represents an effort to rejuvenate Xi’s faltering plans to overhaul the Chinese economy. But he still faces widespread skepticism that he is committed to thorough restructuring, which would require reducing bloated state enterprises, along with millions of jobs.

As Americans, we got the second part up the you-know without the first part. 

Bureaucracy's first answer to every problem is let's form another layer of bureaucracy.

“Thatcher and Reagan are highly regarded because it was proven that they made the right choices under heavy pressure,” said Jia Kang, an economist in the Ministry of Finance and the most prominent advocate of the new policies. “Their spirit was one of boldly taking on challenges and innovating, and that’s certainly worth Chinese people emulating.”

The supply side Xi is referring to would, like Reaganomics, include lowering taxes and reducing the government burden on investors. 

Yeah, poor, poor investors shuffling money around.

Yet its main goal appears to be shutting or paring down mines and factories that produce far more coal, steel, cement, and other industrial products than the market demands and reining in the credit and subsidies that feed that glut. 

I was once told corruption is good for an economy.

Some economists say the supply-side rubric is at least a step toward painful measures that could lead to healthier growth.

It will for $ome, I'm $ure. Had 35 years experience over here, and have you seen the wealth inequality yawn. 

Of course, the Chinese have their own divide.

“It is an important new initiative designed to reinvigorate the reform process,” Barry Naughton, a professor of economics at the University of California San Diego, said by e-mail. “Policy makers have stumbled repeatedly, and overall the achievements in market-oriented reform have been meager. Policy makers needed to come up with another approach.”

Xi has reorganized China’s military and orchestrated a scorching campaign against corruption. But breakthroughs in the economy have eluded him, which many economists say have sapped business confidence. 

He's limited because of the capital outflows, right?

Many liberal economists remain unconvinced that for all the tough talk, the Chinese government would willingly reduce its own power and risk a backlash from displaced workers. Recalibrating state-supported industries to true market levels would mean cutting millions of jobs.

You are seeing the opposite in AmeriKa: government overreach and indifference creating the backlash.

A recent study concluded that if the cuts go through, more than 3 million people in the steel, coal, and similar industries could lose their jobs in the next two years if state cuts go through. On Monday, the government said it would lay off 1.8 million steel and coal workers, around 15 percent of the workforce in those industries, though it did not say when.

This from a government that views harmony at home as its top priority.

“Pain will be unavoidable, but also worthwhile,” said a full-page article extolling supply-side structural reform published in January in People’s Daily, the Communist Party’s main newspaper.

Pain for who?

Since the financial crisis of 2008, the government has spent heavily to stimulate the economy, increasing the debt. Chinese supply-siders say such splurging has reached unsustainable levels. 

Just once I'd like the pre$$ to put that idea to the U.S. government and its actions.

China’s steel production, for example, has “become completely untethered from real market demand” and amounts to more than double the combined production of the four next biggest producers: Japan, India, the United States, and Russia, according to a new report on China’s production overcapacity released by the EU Chamber of Commerce in China....

So has the U.S. economy and its obsession with stock prices above all else.

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Oh, yeah, about those angry workers:

"Labor protests multiply in China as economy slows, worrying leaders" by Javier C. Hern├índez New York Times  March 15, 2016

GUANGZHOU, China — For nearly seven years, Li Wei rose before dawn for his 10-hour shift at the steel plant, returning home each night soaked in sweat, the clank of heavy machinery still ringing in his ears. But last month, the 31-year-old welder stood outside the plant with hundreds of co-workers, picketing against pay cuts and singing patriotic battle hymns.

??!!?? 

In China?

Within a week, the authorities declared their strike illegal, threatening fines and imprisonment. The police descended on the plant by the hundreds, tearing down signs and ordering the protesters to go back to work.

Kind of a Chinese Occupy moment, 'eh?

“I’ve sacrificed my life for this company,” Li told officers as they sought to disperse the workers. “How can you do this?”

Why did you think they owed you anything? 

You worked, you got paid. That's the deal. Anything beyond that.... 

Of course, he didn't literally sacrifice his life.

As China’s economy slows after more than two decades of breakneck growth, strikes and labor protests have erupted across the country.

That is so was odds with the conventional image fed to us by the pre$$. China is an authoritarian state where no dissent is brooked -- so unlike AmeriKa! 

Factories, mines, and other businesses are withholding wages and benefits, laying off staff, or shutting down altogether. Worried about their prospects in a gloomy job market, workers are fighting back with unusual ferocity.

Awwww, you get used to it and the government will fudge the unemployment numbers so you feel better.

Last week, hundreds if not thousands of angry employees of the state-owned Longmay Mining Group, the biggest coal company in northeastern China, staged one of the most politically-daring protests over unpaid salaries yet, denouncing the provincial governor as he and other senior leaders gathered for an annual meeting in Beijing. 

I'll bet it was Trump's fault.

China Labor Bulletin, a labor rights group based in Hong Kong, recorded more than 2,700 strikes and protests last year, more than double the number in 2014. The strife appears to have intensified in recent months, with more than 500 protests in January alone.

Most demonstrations have refrained from political attacks and focused on grievances such as wage arrears, unpaid benefits like pension contributions, and unsafe working conditions.

President Xi Jinping, concerned about challenges to the ruling Communist Party, has responded with a methodical crackdown, quashing protests, dismantling labor rights organizations, and imprisoning activists. But his government has also sought to placate workers, putting pressure on businesses to settle disputes and making billions of dollars available for welfare payments and retraining programs.

There is the difference between China and AmeriKa. Ours are being cut!

The approach underlines the political dilemma that labor unrest poses for the Communist Party, which has continued to portray itself as a socialist guardian of workers’ rights even as it has embraced capitalism and welcomed tycoons into its ranks.

The U.$. government has the same problem!

The tide of protests appears to be cresting as Xi contemplates a tremendous downsizing of China’s bloated state industries, which are producing much more steel, cement, and other goods than the market needs. According to a recent study, more than 3 million workers could lose their jobs in the next two years if the cuts go through. The government has already announced plans to lay off 1.8 million steel and coal workers.

China trimmed the state sector of more than 30 million workers during a wave of privatization and restructuring during the late 1990s and early 2000s. But the economy was booming then, creating millions of jobs in new industries. It is still growing today, but at its slowest pace in a quarter century.

At the same time, Xi is grappling with a labor force that is better informed and more easily organized because of social media, and also more assertive, in part because of grass-roots rights groups that have emerged. 

Starting to smell like a CIA destabilization effort, or at least the piggybacking on top of legitimate protest. Never let an opportunity go to waste.

“This is probably the thing that keeps Xi Jinping up at night,” said Eli Friedman, a scholar at Cornell University who studies Chinese labor issues. “Governments are not swimming in money the way they used to be, and there’s less room to compromise.”

Which room is he staying in?

Here in the capital of Guangdong province in southern China, several hundred workers at the state-owned Angang Lianzhong steel plant went on strike last month in response to a plan to decrease wages by as much as half and extend the workday to 12 hours for some employees.

“Toward the sun, toward freedom!” the workers chanted one morning as they demonstrated outside, reciting a World War II-era army song. 

They were carrying the flag of Japanese occupation?

They used WeChat, a popular messaging app, to rally support and raise money to buy protest banners. In one widely shared post, they described how the authorities had tried to stop them from playing the national anthem on a loudspeaker. (Its first line is, “Rise, we who refuse to be slaves!”)

After the police broke up the strike, the plant promised to delay its planned wage cuts. But several workers said they had returned to work only because they feared punishment.

“I lost hope that anything would change,” said Li, the welder, adding that he was anxious about finding a new job to support his wife and son. 

So have I in certain things.

Officials at the steel plant did not respond for requests for comment.

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No hope for them.

Digging deeper into China's labor issues:

"Demanding pay, Chinese miners protest over governor’s claim" Associated Press  March 13, 2016

BEIJING — Thousands of Chinese miners who say they have not been paid for months staged a rare protest in a northeastern city, days after the provincial governor made the apparently false claim that no miner working for the province’s largest publicly-owned mining company was owed any back wages.

Not only that, their safety conditions are the worst in the world.

Angry miners from the Longmay Mining Holding Group Co. Ltd. and their family members marched through the city of Shuangyashan on Saturday.

In response, the government of Heilongjiang province issued a statement acknowledging that many Longmay employees are owed wages and benefits, backtracking from Governor Lu Hao’s assertions earlier this month.

The protest and the change in the government’s stance underline the sensitivity of the employment issue, as Chinese miners are losing their jobs or seeing their pay drastically cut."

I'm sure Hillary Clinton can fix that.

You know what China really needs, though? 

A $avior tycoon, of a different breed than Trump (have you stayed in his hotels?).

Time to bury this post along with his campaign:

"In China, even the graveyards are getting crowded" by Vanessa Piao New York Times  February 25, 2016

BEIJING — The government ignited an outcry with development guidelines that called for an end to gated residential communities, a directive that encourages family members to be buried together or to have their remains disposed of in environmentally friendly ways has drawn criticism online. Commenters have linked the two measures, since both address the issue of population pressure on tight land supplies by asking citizens to change their way of life, and death.

That's war talk! 

Terrorists attack ways of life!

Chinese authorities have been encouraging frugal burials in recent years in the face of land shortages and exorbitant cemetery prices. There have been sporadic reports in Chinese news media that the prices for grave plots are often higher than for apartments.

The burial directive was issued to address a call last year by the Central Committee and State Council to “step up the construction of ecological civilization” and their 2013 requirement that Communist cadres must take the lead in choosing simple burials....

That is when I stopped shoveling.

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Just burn me up, forget about me, and go enjoy life as best you can. 

That's all I would ask.

UPDATES: 

Zuckerberg meets with China’s propaganda chief

Starwood accepts buyout from Marriott

Sorry I missed that.