Posted on 06/23/2013 11:42:59 AM PDT by BenLurkin
China's government signaled little respite from the cash crunch that has afflicted its financial system since the beginning of June, suggesting tight conditions could continue to strain markets in the week ahead.
A commentary published Sunday by the official Xinhua news agency said there was no shortage of funds in China's financial system. Rather, it said, a combination of speculation and nonbank forms of lending often called shadow finance were contributing to the surge in short-term lending rates.
"It's not that there's no money, it's that the money is not in the right places," the commentary said.
(Excerpt) Read more at online.wsj.com ...
I'm certain that the people who possess the money do not think it is in the "wrong places."
After years and years of positive trade surpluses with us, where did their money all go? More to the point, what will happen to them if we stop buying their stuff? Or even diminish our buying significantly?
Correct. They need us buying their products more then we need them. If we got smart in the US we would stop buying their cheap crap and buy goods from other nations. This would send a fast sharp message to the Chinese that they need America.
It isn't about trade balances, it is that the Chinese central bank has printed massive amounts of money since 2008, on a scale that even dwarfs what the Fed has been doing here. For a while they had been able to absorb some of this, because of the massive amount of infrastructure spending that did go to something useful. However, in the later years, whole ghost cities have been built, and gigantic sums of money have been loaned, and Chinese are starting to realize that like the US, once newly created money can't find useful things to do that provides a return on investment, there is nothing the central bank or government can do to revive the economy.
What now lies ahead is the greatest fear of the government and the upper class that has profited enormously in the last decades, a slowing economy, with a large population that expects growth and the "Chinese Dream." They are actually fearing a revolution.
Correction:
If we got smart in the US we would stop buying their cheap crap, and make it here again.
Bring back US manufacturing.
One hell of a trick if you can pull that miracle off!
...the cash crunch that has afflicted its financial system since the beginning of June, suggesting tight conditions could continue to strain markets in the week ahead... the official Xinhua news agency said there was no shortage of funds... a combination of speculation and nonbank forms of lending often called shadow finance were contributing to the surge in short-term lending rates. "It's not that there's no money, it's that the money is not in the right places," the commentary said.The right place is in the market, and the interest rate needs to float.
That is a brilliant statement. And it's the truth. Would that the FReepers who still believe the government should manage the dollar and decide who we may trade with could understand it.
There is never a shortage of money. People have all they want are willing to work for.
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