]China's banks are an accident waiting to happen to every One of Us

peaceandlove · 07-05-2009, 04:19 PM

China's Banks are an Accident Waiting to Happen to Every One of Us

Fitch Ratings has been warning for some time that China's lenders are wading into dangerous water

By Ambrose Evans-Pritchard
Published: 5:38PM BST 28 Jun 2009

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 Ratings has been warning for some time that China's lenders are wading into dangerous waters, but its latest report is even grimmer than bears had suspected.

"With much of the world immersed in crisis, China appears to be one of the few countries where the financial system continues to function largely without a glitch, but Fitch is growing increasingly wary," it said.

"Future losses on stimulus could turn out to be larger than expected, and it is unclear what share the central and/or local governments ultimately will be willing or able to bear."
Note the phrase "able to bear". Fitch's "macro-prudential risk" indicator for China threatens to jump from category 1 (safe) to category 3 (Iceland, et al). This is a surprise to me but Michael Pettis from Beijing University says China's public debt may be as high as 50pc-70pc of GDP when "correctly counted".

The regime is so hellbent on meeting its growth target of 8pc that it has given banks an implicit guarantee for what Fitch calls a "massive lending spree".

Continues: http://www.telegraph.co.uk/finance/c...one-of-us.html

Source: http://solari.com/blog/

SEE ALSO FEVER I AM'S COMMENTARY

Don't Panic! China's Banks are next to go?

June 29, 2009

Video (10:46):

07-05-2009, 04:19 PM	#1
peaceandlove Avalon Senior Member Join Date: Sep 2008 Location: Turtle Island Posts: 2,776	]China's banks are an accident waiting to happen to every One of Us China's Banks are an Accident Waiting to Happen to Every One of Us Fitch Ratings has been warning for some time that China's lenders are wading into dangerous water By Ambrose Evans-Pritchard Published: 5:38PM BST 28 Jun 2009 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 Ratings has been warning for some time that China's lenders are wading into dangerous waters, but its latest report is even grimmer than bears had suspected. "With much of the world immersed in crisis, China appears to be one of the few countries where the financial system continues to function largely without a glitch, but Fitch is growing increasingly wary," it said. "Future losses on stimulus could turn out to be larger than expected, and it is unclear what share the central and/or local governments ultimately will be willing or able to bear." Note the phrase "able to bear". Fitch's "macro-prudential risk" indicator for China threatens to jump from category 1 (safe) to category 3 (Iceland, et al). This is a surprise to me but Michael Pettis from Beijing University says China's public debt may be as high as 50pc-70pc of GDP when "correctly counted". The regime is so hellbent on meeting its growth target of 8pc that it has given banks an implicit guarantee for what Fitch calls a "massive lending spree". Continues: http://www.telegraph.co.uk/finance/c...one-of-us.html Source: http://solari.com/blog/ SEE ALSO FEVER I AM'S COMMENTARY Don't Panic! China's Banks are next to go? June 29, 2009 Video (10:46):