Fri Feb 1, 2013, 02:06 AM
HiPointDem (20,729 posts)
"The Chinese banking system is insolvent. Of course, the entire global banking system is insolvent"
The Chinese banking system is insolvent. Of course, the entire global banking system is insolvent, but today's spotlight is on China. Please consider China averts local government defaults.
Chinese banks have rolled over at least three-quarters of all loans to local governments that were due to mature by the end of 2012, an indication of the immense challenge facing China in working down its debt load.
Local governments borrowed heavily from banks to fuel China’s stimulus programme during the global financial crisis and are now struggling to generate the revenue to pay them back, a shortfall that could cast a shadow over Chinese economic growth.
Banks extended at least Rmb 3tn ($482bn) – and perhaps more – of the roughly Rmb 4tn in loans plus interest that local governments were to have paid them by the end of last year, according to Financial Times calculations based on official data.
The key point is that massive rollovers were needed to stave off defaults.
“That’s a correct observation and explanation,” said Stanley Li, a banking analyst with Mirae Asset Securities. “Based on the payback period for the infrastructure projects , it will take more than 10 years to pay these loans back...”
7 replies, 839 views
"The Chinese banking system is insolvent. Of course, the entire global banking system is insolvent" (Original post)
|Electric Monk||Feb 2013||#5|
Response to Amonester (Reply #1)
Fri Feb 1, 2013, 02:22 AM
amandabeech (9,647 posts)
2. China is a strange combination.
There are many, many privately owned businesses and many state owned businesses.
They say that they are communists, but health care and a decent education are not free.
It's more a traditional authoritarian state at this point than it is communist.
Response to HiPointDem (Original post)
Fri Feb 1, 2013, 02:43 AM
Control-Z (9,995 posts)
3. Let me get this straight.
The Chinese government borrows from its banks. To which (or whom) they are indebted. And the USA borrows from the Chinese government to pay for the tax cuts we have given to our wealthiest, the bail out of our too big to fail banks, and to pay for our unfunded wars?
My head is spinning. Sounds like maybe we could all just call it a draw and end up in the same place we were headed, but without all the headaches?
Response to HiPointDem (Reply #4)
Fri Feb 1, 2013, 03:19 AM
Electric Monk (11,468 posts)
5. ... A Dollar's Worth of Paranoia ...
...if you and a friend keep paying each other the same fifteen dollars to provide some service for each other (say, you pay him $15 to shake your hand, then he pays you the same $15 to shake his), you'll eventually bump up the GNP and cause a concomitant increase in the money supply. What's more, this increase in the money supply has a tendency to increase spending. So, spending money increases the GNP (whether that spending was to build a museum, clean up an oil spill or tear down an old lady's ancestral home -- so long as the money moves, it doesn't matter why or whence), which increases the money supply, which causes further increases in spending... And let's not even get into inflation.
This is how money breeds -- it evolved in a socio-memetic niche, and is now breeding like fruit flies only wish they could. Sure, THEM can use it (even as it uses THEM, in an icky kind of co-parasitic venture), but money is no more a tool of THEM than bees are a tool of flowers.
It may seem that the credit industry is poised to deliver its own memeto-evolutionary version of a million-ton-meteor impact, but this will only serve to stem the tide of green paper before it comes flooding down Wall Street like a plague of rabbits over a New Zealand farm -- and green paper is only one sub-species of the ubiquitous Dollar. As Ol' Sam managed to point out, money lives primarily in our heads, and the credit industry certainly isn't taking any steps toward bringing money to extinction there -- indeed, the sub-species of Dollar which lives as an abstraction will experience a population explosion of untold proportions if the credit industry ever succeeds in completely unshackling it from the need for physical representation; the abstract dollar will have as great an evolutionary advantage over the paper dollar as the paper dollar did over the gold dollar. Dollars can multiply utterly unhindered in the abstract, without anyone needing to figure out where to put several billion tons of paper. And all the while, they will be sheltered by captains of industry and thrifty housewives alike; will grow fat on greed, commercialism and envy; will be transported to new environs by the spread of Western Culture -- until, eventually, they gain illimitable memetic dominion over the human mind.
Assuming, rather optimistically, that this hasn't happened already.