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China, in Surprising Reversal, Moves to Spur Bank Lending.

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elleng Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Nov-30-11 11:19 AM
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China, in Surprising Reversal, Moves to Spur Bank Lending.
Source: nyt

Faced with an economy that appears to be slowing faster than economists expected even a month ago, the Chinese government on Wednesday evening unexpectedly reversed its year-long move toward tighter monetary policy and took an important step to encourage banks to resume lending.

The central bank said Wednesday that commercial banks would be allowed to keep a slightly lower percentage of their deposits as reserves at the central bank. The change, which will take effect on Monday, means that commercial banks will have more money available to lend, which could help to rekindle economic growth and a slumping real estate market.

Real estate developers, small businesses and other borrowers have been complaining strenuously in recent weeks of weakening sales and scarce credit. Prices have dropped up to 28 percent for new apartments in some Chinese cities this autumn, real estate brokers have been laying off thousands of agents as transactions have dried up, and export orders have slumped.

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BelgianMadCow Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Nov-30-11 05:14 PM
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1. as far as I know, the chinese action was first and may have triggered the "West G7" response
The chinese saying "banks keep less cash" is another way of injecting money of course. Note that the chinese central bank is NOT one of those that reacted concertedly by opening the money spigot. Global currency wars inc or already here.

Note that EU banks holding sovereign bonds are insured against default. That's when the US gets hit (at the latest). The dominos are falling ever faster in deafening silence. We are living on borrowed time. Frugality, barter networks and direct democracy ftw.

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DCBob Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Nov-30-11 06:26 PM
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2. Clear indication they know things are not going well.
I suspect the economic numbers China release for public consumption are no where near reality. China's economy is much too dependent on exports and Im sure they are drying up in many parts of the world.
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