Monday, June 29, 2009

China's banking system crashing?

I realize it is boring, and it is a lot more fun to bash Obamie, and God knows he deserves it......

But this is serious and deserves your close attention.

China's banks are veering out of control. The half-reformed economy of the People's Republic cannot absorb the $1,000bn (£600bn) blitz of new lending issued since December.

Money is leaking instead into Shanghai's stock casino, or being used to keep bankrupt builders on life support. It is doing very little to help lift the world economy out of slump.

........................

Fitch traces the 2009 bubble to the central bank's decision to cut interest on reserves to 0.72pc. Bankers responded to this "margin squeeze" by ramping up the volume of lending instead. Over half the new debt is short-term. Roll-over risk is rocketing. China's monetary stimulus since November is arguably more extreme than the post-Lehman printing of the US Federal Reserve, though less obvious to the untrained eye.


Link

Understand something. We are highly dependent on the ChiComs cycling the money we give for goods back to us.

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