Posted on 07/22/2010 5:41:28 AM PDT by TigerLikesRooster
Thursday, July 15, 2010
China's Shark Loan Ponzi Finance- Fitch Reports That the Size the "Trust Fund" Credit Growth is 28% of the Total Market Credit Growth
A new report came out of Fitch Yesterday, stating that Informal Securitization is increasingly distorting credit Data, and has been under representing the actual amount of new loans in the first half of 2010: "Adjusted for informal securitization activity, Fitch estimates that the net amount of new CNY loans extended in H110 was closer to CNY5.9trn, or 28% above the official figure of CNY4.6trn...
From Special Report- The Secret Engine Behind China’s Housing Bubble- The Ponzi Shark Loan Finance:
This is how this ponzi scheme works:
Local governmental officials, that are demanded from the government to produce double digit GDP growth numbers give real estate developers permits to build housing projects in return for bribes. They also get bribes in return for allowing the shark loan companies to operate under their jurisdiction. some of them are active partners in shark loan businesses. For example, a party secretary of legal affairs, that controls the public security bureau, which is a court and prosecutor division of government in yongkang city, in zhe jiang province tired to run abroad using a passport in 2009 after he found out he can’t repay 60million Yuan. In li Every scheme has a ring leader who's job is to collect money from all the participants in the ponzi scheme. When some of these ponzi schemes blow up, the party leaders always get bailed out first, and some even ask local business owners to lend them money, and then bail out their own personal fund. After that the ring leader turns himself in and gets protection from the local government.
(Excerpt) Read more at israelfinancialexpert.blogspot.com ...
P!
Various Chinese bubbles are going to go pop soon. It won’t be pretty for the Chinese. It might be good for the US dollar.
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