China's economy in a nutshell.
Posted on 11/27/2009 7:53:21 AM PST by SeekAndFind
On Nov. 23, the China Banking Regulatory Commission, Beijing's bank regulator, ordered Chinese lenders to formulate long-term fundraising plans. Those banks with "relatively low" capital adequacy ratios and without "practical" plans would face restrictions on further growth relating to market entry, outbound investment, new branches and "business expansion."
Chinese investors were rattled. On the following day, the Shanghai Composite Index plunged 3.45% on record turnover. Shares of the four largest Mainland banks listed in Hong Kong were down as well. Bank of China fell about 4%.
Bank of China, one of the so-called Big Four banks, increased its loan book 44% in the 12 months ending September. That's astounding, but that bank, in fact, was a laggard. In the first nine months of this year, the country's banks extended $1.27 trillion in loans, more than double the lending during the same period last year.
Chinese banks have gone on an unprecedented spree on orders from Beijing. Last November, the State Council, the central government's cabinet, announced its $586 billion stimulus program. At the time, the government said it would loosen credit. Beijing kept that promise.
Chinese officials essentially forced the banks to lend to support the stimulus program. So state enterprises were forced to borrow. China Aviation Industry Corp., for instance, had to borrow $49.2 billion from 12 Chinese banks this spring. Its general manager, Lin Zuoming, complained in April that he did not know what to do with all the cash. He has had company. About a fifth of bank loans this year have been diverted into the Chinese stock market, fueling its rise. Moreover, bank lending has also contributed to the current property market bubble.
Chinese bank regulators, to their credit, have been progressively concerned about wild lending.
(Excerpt) Read more at forbes.com ...
We owe China more than they can spend...
They shouldnt be out of cash...
Yes, but we’re already out of cash, and their banks are not really as stable as they’re making it out to be.
This isn’t going to look pretty.
Recall when someone here was saying that “something” was supposed to happen in the banking industry by the end of September? Some conjectured the banks would close. Some were saying to take your money out of banks and put it in Credit Unions, recall?
Well, what if instead of the end of the 3rd quarter it happens at the end of the 4th?
My mind is spinning. I am fearful. We owe too much money to China.
Can we all use this information to try to stop the Health Care Reform-Debacle? WILL it stop 0bama at his Waterloo?
For the first time in my adult life, I’m worried about the USofA. Not that we can’t pull out of this, but that China will come in and take over and 0bama is such a metro-sexual wussie that he’ll allow it to happen. And once we’re pwned by China . . . the Republic will cease to exist.
The only bright side is that 0bama will no longer live in the White House. /sarc . . . there IS NO bright side.
However, there are signs, such as the rate of growth in electricity usage that fail to confirm that the 8% rate of growth is a real number. This raises the specter that China is doing what all good fiat money, fractional-reserve, Kenynesians do to manipulate the rate of economic growth: they are expanding the supply of money.
It appears they are doing this in several ways. They are purchasing our debt, which is our way of exporting our own inflation. They are allowing banks to rollover nonperforming loans. They have lower reserve requirements than appears to be prudent. All these things point to a bubble that will everywhere and always burst. When it does, it will no be pretty.
China’s not going to screw us. They need us to keep buying all their cheap, polluted worthless junk. No other nations buy enough worthless crap to keep China afloat and free of revolution than we do.
Yes but they can’t cash in. A bit like you trying to cash in your GM bonds, with the US as GM.
I guess all that Free Trade with Communist China worked /sarc
Be interesting to see how the Cheerleaders for Communist China spin this one...
China's economy in a nutshell.
I am forming the opinion the whole world is bankrupt.
I watched the video.
Absolutely incredible.
The apartment buildings have been sold to investors who are not bothering to rent them? They expect the property prices to rise forever.
Gee, sounds like people in the U.S. housing market pre-2007. China can’t build an economy on smoke and mirrors forever.
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