Posted on 03/18/2005 12:43:48 AM PST by nickcarraway
First sign of coming Chinese Financial Crisis – resignation and possible house arrest of Zhang Enzhao, chairman of China Construction Bank
While the whole world is focused on oil price, behind a major financial crisis is becoming more transparent that can bring depression in Asia if not the whole world.
On March 15th, Zhang Enzhao, chairman of China Construction Bank (CCB) -- one of China's "Big Four" financial institutions -- resigned, citing personal reasons.
According to sources close to Chinese Financial Authorities, Zhang was actually removed from his position and is under house arrest while a major corruption investigation goes on. What really happened in CCB is typical in Asia especially China.
The way loan is provided to private industry is China is less than a transparent process. Like in India, the executives of Government controlled Banks receive bribes, favor of all kinds and in exchange they provide loans without much regard to the loan worthiness of the debtor. Very little is done what is known in the western world as loan underwriting. The Banks are considered more as a source of capital than loan processor. Nationalized banks are regarded as a Government give outs to businesses. It does not matter if the business is profitable or not.
The corruption level in China is so high that the Government is really concerned. India is not far behind. The loan officers and executives of Indian Banks receive bribes regularly. But induction of private Banks in India especially the foreign banks has made these nationalized banks change. The Government in India threatens the banks that they will be privatized unless they are efficient. That has lowered the corruption level.
The Banking in China is completely controlled under the gun of the Government. That is the source of solid corruption and the Chinese Financial system can plunge as soon as Chinese currency is made flexible and floats in the open market.
bttt
Mmmmmmmmm...Krispy Kreme...
Does this mean we will be able to buy Chinese products for $0.68 instead of $1.00 ?
Prices would go up. Turbulence. Inflation. Etc. We DEFINITELY need the national sales tax.
The Com. Party will just use this as a reason to slam capitalism and reinforce their hold on the Govt. Never mind they are the guilty party. I hate communists.
I hate communists.
The NEP men will continue to suffer their fate,
as history has shown. Communists are like terrorists,
they only know how to do one thing, only a fool (or liberal)
expects a different result.
I hate communists.
Bill Gates says China has created brand-new form of capitalism (and praises Communist leaders)
http://www.freerepublic.com/focus/f-news/1331228/posts
Barf Alert - Once Again, Bill Gates Praises the Communist Dictators of China
http://www.freerepublic.com/focus/f-news/1344926/posts
China's leaders order Communist Party to take stronger role in business
http://www.freerepublic.com/focus/f-news/1328492/posts
...some 150,000 or so government-owned businesses, in China, IIRC.
But it's not only Bill Gates. Many of our other business people are hanging on to that kind of philosophy. Some of our Baby Boomer peers might be our undoing, if they don't change their ways.
I hate communists.
You just don't see this in print often enough.
Bad news. If China's economy tanks, ours won't be far behind. Of course, the inverse is also true.
Only because it will force them to sell all those Treasury notes they're holding, thus pulling the rug out from under the US dollar.
Someone told me once that's exactly what happened in the Soviet Union. They lured in skilled labor, technology, etc. Then when they felt it wasn't needed anymore, they closed the trap. Gulags. They probably did it a little too soon, thank God. Unlimited power is too much temptation for a government to wear a halo forever.
Uh Oh, somebody is going to get a bullet in the back of the head after the investigation.
bump for later
You could be right. I'm tempted to ask, 'What investigation?' But who knows? They might check under his mattress.
It would be interesting to think how a Chinese crash might play out. In 1997 Thailand had a currency that traded freely but whose value was managed by the gov't. But the baht was overvalued, and the yuan is generally thought to be undervalued.
China places a lot of restrictions on taking currency out of the country, but as I understand it so did the US under Bretton Woods. That didn't prevent the Eurodollar market from developing. Does anyone know whether parallel markets for the yuan outside China exist yet? And if so I wonder what the aftermath of a sharp Chinese currency adjustment (upward, not downward) would be.
I pity communists. They think we can't trust 'big money', not paying attention to the dangers of 'big government'. If they get their way, they reap the whirlwind. FReegards....
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